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Question
Peter is deciding between consuming Good X and Good Y. At his current level of consumption, his marginal utility per dollar for Good X is less than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Peter needs to
a. consume more of Good Y until the marginal utility per dollar for Good X is greater than the marginal utility for Good Y.
b. consume less of Good X or more of Good Y until the marginal utility per dollar for Good X and Good Y is equal.
c. consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
d. consume less of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
e. continue at his current level of consumption.
Answer
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