A consumer finds that MUₓ ÷ Pₓ is greater than MUᵧ ÷ Pᵧ. To raise his satisfaction he should

spend more on Y and less on XCorrect answerYour answerspend more on X and less on YCorrect answerYour answerspend equal amounts on bothCorrect answerYour answerstop buying bothCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

A rupee moved from Y to X gains more utility than it loses.
As he buys more X its MU falls, and as he buys less Y its MU rises, until the two ratios are equal.

Concept: Adjusting towards equilibrium
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEquilibrium with two goods

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Ten questions from Utility & Consumer's Equilibrium, at your own pace.

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Ten questions from Utility & Consumer's Equilibrium, at your own pace.

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A consumer finds that MUₓ ÷ Pₓ is greater than MUᵧ ÷ Pᵧ. To raise his satisfaction he should

Explanation