If Px = Py, then when the consumer maximises utility,

X must be equal to Y
MU(X) must be equal to MU(Y)
MU(X) may equal MU(Y), but it is necessarily so
X and Y must be substitutes

The correct answer is B. MU(X) must be equal to MU(Y).

The law of diminishing marginal utility states that as a consumer consumes more of a good, the marginal utility of that good decreases. This means that the additional satisfaction that a consumer gets from consuming one more unit of a good decreases as the consumer consumes more of that good.

When the consumer maximizes utility, the marginal utility of each good is equal to the price of that good. This is because the consumer will not consume any more of a good if the marginal utility of that good is less than the price of that good.

If Px = Py, then the marginal utility of X must be equal to the marginal utility of Y. This is because the consumer will not consume any more of X or Y if the marginal utility of X is less than the marginal utility of Y or vice versa.

A is incorrect because the consumer may consume more of X than Y or vice versa.
C is incorrect because MU(X) may equal MU(Y) but it is not necessarily so.
D is incorrect because X and Y may be complements or substitutes.

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