When the Marginal Utility Per Dollar of Good X Exceeds

question 25

Multiple Choice

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

• A) the consumer should consume more of good x.
• B) the consumer is consuming too much of good x.
• C) good y must have a negative marginal utility.
• D) the consumer is in an optimal situation if the price of good x exceeds the price of good y.

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Definitions:

Piano Lessons

Formal instruction in playing the piano, typically involving one-on-one sessions between a student and a teacher.

Interest Rate

The fee, shown as a fraction of the total amount lent, that a lender imposes on a borrower for the utilization of resources.

Utility Function

A mathematical representation that defines the level of satisfaction or utility that a consumer derives from consuming certain goods or services.

Consumption

The use of goods and services by households or individuals, leading to the satisfaction of their wants and needs.