Answered

a consumer had been consuming product x for some time. this period, she buys fewer x in order to try some units of a new product y. she finds that her marginal utility of x is 20 (at a price of $10 per unit), while the marginal utility of y is 36 (at a price of $12). the utility-maximizing rule suggests that this consumer should multiple choice increase consumption of product x because it is an old reliable product. increase consumption of product x because of its lower price. increase consumption of product y because it has a higher mu. increase consumption of product y because it has a higher mu/p.

Answer :

According to the utility-maximizing rule, this consumer ought to consume more good Y than good X. The right response in this case is option C.

According to the utility maximization rule, consumers organize their earnings such that every dollar spent on a product results in the same amount of additional marginal utility.

The rule is stated as MUx/Px = MUy/Py.

Marginal utility of x/price of x = marginal utility of y/price of y.

Plugging into the values, we get,

20/10 = 36/12

2<3.

The consumer should consume more of good Y since its marginal utility is higher. After a given amount of consumption, the marginal utility from good Y will eventually decrease owing to declining utility, and the equality will once again hold.

To learn more about the utility-maximizing rule

https://brainly.com/question/15411031

#SPJ4

Go Question: Other Questions