Economics 9708 · AS & A Level · Indifference curves and budget lines

Indifference curves and budget lines — practice question

A consumer purchases goods X and Y. The marginal utility of good X is positive and decreasing. The consumer is at the point at which the ratio of the marginal utility of the two goods equals the ratio of their prices. What may be concluded from this information?

  • Athe consumer will continue to consume additional units of X until marginal utility is zero
  • Bthe consumer will purchase more of X if the price of Y rises
  • Ctotal utility will be negative on the additional unit of X consumed
  • Dtotal utility will be rising at an increasing rate on the additional unit of X consumed

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