Which of the following statements is always true when determining the consumer optimum?
A) Maximizing utility does not take budget restraints into consideration.
B) Maximizing utility is easy if you are considering only two goods.
C) Maximizing utility requires the marginal utility per dollar to be equal for each good consumed.
D) Maximizing utility requires the total utility per dollar to be equal for each good consumed.
E) Maximizing utility requires the marginal utility to be equal for each good.

Question

Quizplus · Accepted Answer

Maximizing utility requires the marginal utility per dollar to be equal for each good consumed. This means that the last dollar spent on each good must provide the same increase in utility. When this condition is met, the consumer is spending their money in the most efficient way possible to achieve the highest level of satisfaction. The other options are not always true, as A is incorrect since budget restraints are a crucial factor, B is incorrect since maximizing utility can be more complex than just two goods, D is incorrect since total utility does not take into account the cost of each good, and E is incorrect since marginal utility can vary for each good consumed.

Which of the Following Statements Is Always True When Determining