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Marginal Utility of X (units of utility) Marginal Utility of Y (units of utility) Price of X ($) 12 Price of Y ($) 4 maximize utility, Claudia should A. not change her expenditures. B. buy less of good X and more of good Y. C. buy more of good X and less of good Y. D. buy more of each good. E. buy less of each good.

Marginal Utility of X (units of utility) Marginal Utility of Y (units of utility) Price of X ($) 12 Price of Y ($) 4 maximize utility, Claudia should A. not change her expenditures. B. buy less of good X and more of good Y. C. buy more of good X and less of good Y. D. buy more of each good. E. buy less of each good.

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 4CQ
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Why is the answer B and not C? I thought that to be able to maximize utility we had to buy more of X and less of Y in order to increase marginal utility in Y and decrease marginal utility in X to reach an equal marginal utility for both. Thank you!

Identify whether Claudia's expenditure on each product should rise or fall in order to maximize utility. Assume that Claudia's consumption choices are using up her entire budget. Marginal Utility of X (units of utility) Marginal Utility of Y (units of utility) 2 Price of X ($) Price of Y ($) 4 12 4 To maximize utility, Claudia should O A. not change her expenditures. O B. buy less of good X and more of good Y. O C. buy more of good X and less of good Y. O D. buy more of each good. O E. buy less of each good.
Transcribed Image Text:Identify whether Claudia's expenditure on each product should rise or fall in order to maximize utility. Assume that Claudia's consumption choices are using up her entire budget. Marginal Utility of X (units of utility) Marginal Utility of Y (units of utility) 2 Price of X ($) Price of Y ($) 4 12 4 To maximize utility, Claudia should O A. not change her expenditures. O B. buy less of good X and more of good Y. O C. buy more of good X and less of good Y. O D. buy more of each good. O E. buy less of each good.
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