We are maximizing our utility when the ______ of each good and service we purchase is equal to ______.
A)total utility;its price
B)marginal utility;its price
C)marginal utility;one
D)total utility;one

Question

Quizplus · Accepted Answer

Maximizing utility requires that the ratio of marginal utility to price is equal across all goods and services. This ensures that the last unit of each good and service consumed provides the same additional satisfaction per dollar spent, and therefore allocates spending in the most efficient way possible. Therefore, the answer is B, as we are maximizing our utility when the marginal utility of each good and service we purchase is equal to its price.

We Are Maximizing Our Utility When the ______ of Each