A Consumer Currently Spends a Given Budget on Two Goods

question 345

Multiple Choice

A consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 12 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $4. The utility-maximizing rule suggests that this consumer should

• A)decrease consumption of product X and increase consumption of product Y.
• B)decrease consumption of product X and decrease consumption of product Y.
• C)decrease consumption of product Y and increase consumption of product X.
• D)stick with the current consumption mix because it yields maximum utility.

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Definitions:

Conventional Moral Reasoning

A stage of moral development where individuals make decisions based on social norms and the expectations of others, typically occurring during adolescence.

Kohlberg's Theory

A theory of moral development proposed by Lawrence Kohlberg, suggesting that moral reasoning progresses through a series of stages.

Perspective

A particular attitude toward or way of regarding something; a point of view.

Genetic Causes

Factors originating in an individual's DNA that contribute to the development of certain conditions or traits.