Ron Starts Out in Consumer Equilibrium,consuming Two Goods,X and Y

question 61

Multiple Choice

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

• A)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of X.
• B)MU_X/P_X > MU_Y/P_Y,and then Ron decreases his consumption of X.
• C)MU_X/P_X < MU_Y/P_Y,and then Ron increases his consumption of X.
• D)MU_X/P_X < MU_Y/P_Y,and then Ron decreases his consumption of X.
• E)none of the above.

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Definitions:

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Composite Units

A measurement or costing method that combines different elements or articles to determine a standard unit rate or cost.

Sales Mix

The proportion of different products or services that a company sells, reflecting the variety and quantities sold.

Fixed Costs

Expenses that do not change in proportion to the level of activity or production, such as rent, salaries, and insurance premiums.