A consumer maximizes total utility from a given amount of income when the
A)Marginal utility per dollar obtained from the last unit of each good is the same.
B)Marginal utility of the last unit of each good is the same.
C)Total utility obtained from each product is the same.
D)Amount spent for each product is the same.

Question

Quizplus · Accepted Answer

When a consumer maximizes total utility from a given amount of income, they are trying to allocate their spending in a way that gets them the most satisfaction for their money. This means that they should spend their money on goods that provide the highest marginal utility per dollar, until the marginal utility per dollar for each good is equal. This way, they are getting the most utility out of each dollar spent. Therefore, choice A is the best option.

A Consumer Maximizes Total Utility from a Given Amount of Income