Suppose the Marginal Utility of a Unit of Good X

question 144

Multiple Choice

Suppose the marginal utility of a unit of Good X = MU_x,the marginal utility of a unit of Good Y = MU_y,P_x = the price of a unit of Good X,and P_y = the price of a unit of a Good Y.A utility-maximizing consumer who purchases two goods,X and Y,allocates her budget in such a way that _____

• A)MU_x = MU_y.
• B)TU_x = TU_y.
• C)MU_x/P_y = MU_y/P_x.
• D)TU_x/P_y = TU_y/P_x.
• E)MU_x/P_x = MU_y/P_y.

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Definitions:

Experiment

A procedure undertaken to support, refute, or validate a hypothesis, typically involving the manipulation of variables to observe the effect on some behavior or condition.

Outcomes

The possible results that may occur as a result of an experiment or event.

Independent Events

Two events are considered independent when the happening of one does not influence the likelihood of the happening of the other.

Probability

An indicator showing the probability that a specific event will take place, represented by a numerical value ranging from 0 to 1.