Sue is maximizing her utility. Her MU x /P x = 10 and MU y = 40. Then the price of Y must beA) $1.B) $4.C) $10.D) $40.

Question

Sue is maximizing her utility. Her MU x /P x  = 10 and MU y  = 40. Then the price of Y must beA)  $1.B)  $4.C)  $10.D)  $40.

Barbara Basia · Accepted Answer

Final Answer : B, Explanation :  The utility maximization condition states that for a consumer to maximize utility, the ratio of the marginal utility of good X to its price (MUx/Px) should equal the ratio of the marginal utility of good Y to its price (MUy/Py). Given MUx/Px = 10 and MUy = 40, to find Py when the ratios are equal, we set 10 = 40/Py, solving for Py gives Py = $4.

Sue is maximizing her utility. Her MU_x/P_x = 10 and MU_y = 40. Then the price of Y must be

A) $1.
B) $4.
C) $10.
D) $40.

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Learning Objectives

Learning Objectives

Related questions

Sue is maximizing her utility. Her MUx/Px = 10 and MUy = 40. Then the price of Y must beA) $1.B) $4.C) $10.D) $40.

Definitions

Learning Objectives

Learning Objectives

Related questions

Sue is maximizing her utility. Her MU_x/P_x = 10 and MU_y = 40. Then the price of Y must be

A) $1.
B) $4.
C) $10.
D) $40.