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### Course: AP®︎/College Microeconomics>Unit 1

Lesson 6: Marginal analysis and consumer choice

# Marginal benefit AP free response question

In this video, walk through the solution to one of the questions on the free response section of the 2016 AP Microeconomics exam.

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• At , if Martha's income falls to \$10 with no change in prices, the optimal combination for her would become 3 units of Y and 1 unit of X, as this would exhaust her budget and give her the maximum total utility. But won't this combination contradict the condition MUx/Px = MUy/Py? As the MU/P of the 1st unit of X is 4 but that of the 3rd unit of Y is 3. So in this case, the optimal combination would be one where (MUx/Px)>(MUy/Py). Moreover, Martha cannot choose a combination with (MUx/Px)=(MUy/Py) by buying one unit less of Y, as this would decrease the total utility and not exhaust her budget, or by buying one extra unit of X as this falls beyond her budget. Please clarify.