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?

Answer 1

Answer:

Peter needs to consume more of the good Y.

Explanation:

Marginal utility is the additional satisfaction the individual has in consuming one unit more than one good. In this case, the marginal utility of consuming good y is greater than the marginal utility of consuming good x. Thus, to maximize its consumption, Peter will consume more of the good Y, which will give him greater satisfaction.