Asked by
Trixie Gayle Verde
on Nov 04, 2024
Verified
Richard is consuming X and Y so that he is spending his entire income and MUx/Px = 6 and MUy/Py = 10. To maximize utility, he should
A) continue to consume the same amount of X and Y since he is already maximizing utility.
B) consume less of both X and Y.
C) consume more X and less Y.
D) consume less X and more Y.
Marginal Utility
The additional satisfaction or usefulness obtained from receiving one more unit of a product or service.
Price Ratio
A comparison of the prices of two goods or services, used to analyze consumer preferences or the cost-effectiveness of different products.
Income
The money received by an individual or business in exchange for labor, services, or investment, often measured on a regular basis like monthly or yearly.
- Understand the concept of utility maximization and its application in consumer choice.
Verified Answer
AP
Learning Objectives
- Understand the concept of utility maximization and its application in consumer choice.