If the marginal utility of the last unit commodity at is 16 and that of commodity at is 24 , the consumer will be at equilibrium when ____________
A. the price-quantity ratios are equal B. equal amounts of and Yare consumed C. less of and more of are consumed D. less of and more of are consumed
Correct Answer: C
Explanation
The condition for utility maximization is If they are not equal, the consumer is not at equilibrium. Given the marginal utility and the price of and Therefore, the consumer should consume more of to make the MU of fall.