Suppose a consumer wants to obtain the highest possible satisfaction from goods purchased on a fixed budget. Which of the following must be equal for all goods?
A) Total utility.
B) Marginal utility.
C) Average utility.
D) Marginal utility per dollar.

Question

Quizplus · Accepted Answer

In order to obtain the highest possible satisfaction from goods purchased on a fixed budget, the consumer must allocate their budget in such a way that the marginal utility per dollar spent is equal for all goods. This ensures that the consumer is getting the most satisfaction for their money spent. Total utility and average utility vary between goods and are not necessarily equal, while marginal utility is important in decision-making but does not necessarily need to be equal for all goods.

Suppose a Consumer Wants to Obtain the Highest Possible Satisfaction