ASSIGNMENT 4
CONSUMER BEHAVIOUR AND COST OF PRODUCTION
1. Assume MUc and MUd represent the marginal utility that a consumer gets from
products C and D, the respective prices of which are Pc and Pd. The consumer will
increase his total utility from a specific money outlay by spending more on C and less
on D if initially:
A.
B.
C.
D.
2. Suppose that MUx/Px exceeds MUy/Py. To maximize utility the consumer who is
spending all her money income should buy:
A) less of X only if its price rises. C) more of Y only if its price rises.
B) more of Y and less of X. D) more of X and less of Y.
Use the following to answer question 3:
U n it s M U
x
M U
x
/ M U
x
/ U n i t s M U
y
M U
y
/
