Final answer:
The consumer can increase total utility by purchasing more of good Y because the marginal utility per dollar spent on Y is higher than that for X. Consumption patterns change with income levels, with an increase typically leading to more consumption of normal goods and possibly less for inferior goods. Allocation decisions are influenced by marginal utilities and the nature of the goods.
Step-by-step explanation:
If an individual is allocating income over goods X and Y such that MUx/Px < MUY/PY, the consumer can increase total utility by purchasing more of good Y. This is because the marginal utility per dollar spent on Y is higher than that for X, suggesting that Y offers a greater increase in satisfaction per unit of currency spent. When incomes rise, consumers typically purchase more of both goods if they are normal goods. Consumption patterns can vary according to personal preferences, but in general, a rise in income will lead to an increase in quantity consumed for normal goods. Conversely, for inferior goods, an increase in income may lead to a decrease in consumption of that good. Decisions on how to allocate additional income depend on the relative marginal utilities and the type of goods involved.