According to the inequality, the marginal utility per dollar spent on good X is less than the marginal utility per dollar spent on good Y. According to the rule of equal marginal utility per dollar spent, what can a consumer do to increase total utility for a given budget from consumption of goods X and Y?

Question

Business

Jaslene Vance

28 February, 11:08

According to the inequality, the marginal utility per dollar spent on good X is less than the marginal utility per dollar spent on good Y. According to the rule of equal marginal utility per dollar spent, what can a consumer do to increase total utility for a given budget from consumption of goods X and Y?

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Answers (1)

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Amie · Answer 1

The answer is: Consume more good Y and less good X.

Explanation:

The marginal utility of good Y is greater than the marginal utility of good X. This means that an extra unit consumed of good Y will give the consumer a grater satisfaction than consuming an extra unit of good X. So if the consumer wants to increase his total utility (satisfaction) he should buy more units of good Y.