At the Utility Maximizing Equilibrium for Two Goods, X and Y

question 326

Multiple Choice

At the utility maximizing equilibrium for two goods, X and Y, which of the following must be TRUE?

• A) The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on Y.
• B) The total expenditure will be the same for each good.
• C) The marginal utility per dollar from X equals the marginal utility per dollar from Y.
• D) The marginal utility will be the same for each good.

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Definitions:

Elimination

A method in algebra for solving systems of equations, removing one variable at a time to find their values.

Linear Equations

Equations between two variables that produce a straight line when graphed.

Consistent

In the context of systems of equations, it refers to a system that has at least one set of solutions.

Inconsistent

Describes a system of equations that has no solution because the equations represent parallel lines which never meet.