Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 8 and MU_y/P_y = 4. To maximize utility, he should consume

A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.

Question

Esteven Hernandez · Accepted Answer

Final Answer : C, Explanation :  To maximize utility, the consumer should equalize the marginal utility per dollar spent across all goods. Given that the marginal utility per dollar spent on X is 8 and on Y is 4, Jon should consume more of X (where he gets more utility per dollar spent) and less of Y to maximize his utility.

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 8 and MU_y/P_y = 4. To maximize utility, he should consume

A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.

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Learning Objectives

Learning Objectives

Related questions

Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and MUy/Py = 4. To maximize utility, he should consumeA) the same amount of X and Y since he is already maximizing utility.B) less of both X and Y.C) more X and less Y.D) less X and more Y.

Definitions

Learning Objectives

Learning Objectives

Related questions

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 8 and MU_y/P_y = 4. To maximize utility, he should consume

A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.