Goods X and Y

Multiple Choice

Goods X and Y

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

-Refer to Goods X and Y.Suppose the consumer is at an optimum,spending all his income on good X.How are the marginal value of X and the relative price of X related at this corner solution?

A) The marginal value of X and the relative price of X must be equal.
B) The marginal value of X must be less than or equal to the relative price of X.
C) The marginal value of X must be greater than or equal to the relative price of X.
D) There is no definite relationship between the marginal value and the relative price of X.