CAIE A-Level Economics 7.1.3 Equi-marginal principle

CAIE A-Level Economics 7.1.3 Equi-marginal principle
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise applying the equi-marginal principle to consumer choices between goods with different prices and marginal utilities.

How this is tested

  • use MU divided by price to identify the utility-maximising bundle of two goods
  • predict how a change in marginal utility or price alters a rational consumer's spending

Question 4

[Maximum number: 1]

A consumer maximises his total utility by initially buying 10 units of good X and 10 units of good Y.

Assuming both goods are normal, what would cause this utility-maximising consumer to purchase more of good Y and less of good X ?

A

an increase in the marginal utility of good Y

B

an increase in the price of good Y

C

an increase in the tax on the consumption of good Y

D

an increase in the tax on the income of consumers