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When(MU_x)/(P_x)>(MU_y)/(P_y)
Related Topics
Wize University Microeconomics Textbook > Theory of Consumer Choice
Optimal Bundle (Utility Maximization)
4 Activities
When
M
U
x
P
x
>
M
U
y
P
y
\frac{MU_x}{P_x}>\frac{MU_y}{P_y}
P
x
M
U
x
>
P
y
M
U
y
Consumption of good x will increase leading to decrease in
M
U
x
MU_x
M
U
x
and consumption of good y will increase, leading to decrease in
M
U
y
MU_y
M
U
y
until
M
U
x
P
x
=
M
U
y
P
y
\frac{MU_x}{P_x}=\frac{MU_y}{P_y}
P
x
M
U
x
=
P
y
M
U
y
Consumption of good x will decrease leading to decrease in
M
U
x
MU_x
M
U
x
and consumption of good y will decrease leading to decrease in
M
U
y
MU_y
M
U
y
until
M
U
x
P
x
=
M
U
y
P
y
\frac{MU_x}{P_x}=\frac{MU_y}{P_y}
P
x
M
U
x
=
P
y
M
U
y
Consumption of good x will increase leading to decrease in
M
U
x
MU_x
M
U
x
and consumption of good y will decrease leading to increase in
M
U
y
MU_y
M
U
y
until
M
U
x
P
x
=
M
U
y
P
y
\frac{MU_x}{P_x}=\frac{MU_y}{P_y}
P
x
M
U
x
=
P
y
M
U
y
Consumption of good x will increase leading to decrease in
M
U
x
MU_x
M
U
x
and consumption of good y will increase leading to increase in
M
U
y
MU_y
M
U
y
until
M
U
x
P
x
=
M
U
y
P
y
\frac{MU_x}{P_x}=\frac{MU_y}{P_y}
P
x
M
U
x
=
P
y
M
U
y
Consumption of good x will increase leading to increase in
M
U
x
MU_x
M
U
x
and consumption of good y will increase leading to decrease in
M
U
y
MU_y
M
U
y
until
M
U
x
P
x
=
M
U
y
P
y
\frac{MU_x}{P_x}=\frac{MU_y}{P_y}
P
x
M
U
x
=
P
y
M
U
y
I don't know
Check Submission
More Optimal Bundle (Utility Maximization) Questions:
Practice: Optimal Consumption 2
The table shows Jerry's utility from consuming fried chicken and burgers. Suppose Jeffrey has $12 to spend and the unit price of fried chicken and burgers are $1 and $2, respectively. What is Jerry's optional consumption bundle?
Practice: Optimal Consumption 1
Derek’s marginal utility for consuming coffee is 4. His marginal utility for eating a slice of pizza is 10. Each cup of coffee cost $2 and each slice costs $4.50. Which of the following is true?
a) Derek at his optimal consumption bundle
b) Derek will consume more coffee and less pizza
Suppose Paulina is consuming her optimal consumption bundle of goods 1 and 2. Which of the following must be true?
Which of the following is true about a consumer with the given budget line and two indifference curves
In the diagram above, suppose the consumer's income is $25,200, price of X is $1575 and price of Y is $700.
a) What is the optimal quantities of X and Y?
X =
8
The price of apples is $1.50 and the price of peaches are $2.50. Mark gets a marginal utility of 30 from his last apple and a marginal utility of 40 from his last peach consumed. Based on this information, how should he change his consumption of the two fruits?
Jessica consumes chocolate bars and chips. Chocolates cost $2 per unit and chips cost $4 per unit. How many units of each good will she consume if she has $8 to spend?
Optimal is 0 chocolates and 2 chips
Arnold can consume either oranges or kiwi. The price of an orange is $1 and the price of a kiwi is $1. At Arnold's current consumption bundle, his marginal utility from oranges is 10 and his marginal utility from kiwi is 7.5. Arnold is better off
Practice: Optimal Consumption
The condition of optimal consumption, for any pair of products, X and Y, is
Practice: Marginal Utility 2
Derek’s marginal utility for consuming coffee is 4. His marginal utility for eating a slice of pizza is 10. Each cup of coffee cost $2 and each slice costs $4.50. Which of the following is true?
A consumer's optimal bundle happens to be a point on the x-axis. Which of the following are true?
In general, a consumer chooses the consumption bundle that
Practice: Utility
Economists usually assume that consumers: