The MU/P Ratio for Good X Is Greater Than the MU/P

question 165

Multiple Choice

The MU/P ratio for good X is greater than the MU/P ratio for good Y. To achieve consumer equilibrium, the consumer reallocates dollars from the purchase of good Y to the purchase of good X. If the law of diminishing marginal utility holds, the marginal utility of good X __________ and the marginal utility of good Y __________.

• A)falls, rises
• B)rises, falls
• C)rises, stays constant
• D)falls, stays constant
• E)stays constant, rises

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Definitions:

Total Cost Ratio

A financial metric that sums all the costs associated with the production and delivery of goods or services to the market, divided by the total quantity produced, to assess efficiency.

Labor Demand

The total amount of workers that employers are willing and able to hire at a given wage rate in a given time period.

Resource Pricing

The determination of the price for natural resources based on factors like scarcity, demand, and extraction costs.

Determinant

A factor or variable that decisively affects the nature or outcome of something.