Assume a consumer is spending all her income on two goods: \( X \) and \( Y \). At the current consumption combination of the two goods, if the marginal utility per dollar spent on the last unit of good \( X \) exceeds that of the marginal utility per dollar spent on the last unit of good \( Y \), what should the consumer do to maximize utility?

To maximize utility, the consumer should adjust her consumption of goods \( X \) and \( Y \) based on the marginal utility per dollar spent on each good. 1. **Understanding Marginal Utility**: - Marginal utility (MU) is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good. - The marginal utility per dollar spent on a good is calculated as: \[ \text{MU per dollar} = \frac{\text{MU}}{\text{Price}} \] 2. **Current Situation**: - The consumer is currently consuming goods \( X \) and \( Y \). - It is given that the marginal utility per dollar spent on good \( X \) exceeds that of good \( Y \): \[ \frac{MU_X}{P_X} > \frac{MU_Y}{P_Y} \] where \( MU_X \) and \( MU_Y \) are the marginal utilities of goods \( X \) and \( Y \), and \( P_X \) and \( P_Y \) are their respective prices. 3. **Recommendation**: - To maximize utility, the consumer should increase her consumption of good \( X \) and decrease her consumption of good \( Y \). This is because by reallocating her spending towards good \( X \), she will gain more utility per dollar spent. - The consumer should continue to adjust her consumption until the marginal utility per dollar spent on both goods is equal: \[ \frac{MU_X}{P_X} = \frac{MU_Y}{P_Y} \] 4. **Conclusion**: - The consumer should buy more of good \( X \) and less of good \( Y \) until the marginal utility per dollar spent on both goods is equalized. This adjustment will lead to the maximization of her total utility given her budget constraint.