When making a decision between purchasing two goods, what does a consumer compare in order to reach consumer equilibrium?
A) the marginal utility for each item
B) the marginal utility per dollar spent for each item
C) the prices of each item
D) the total utility from the purchase of each unit of the items

Question

Quizplus · Accepted Answer

In order to reach consumer equilibrium, a consumer compares the marginal utility per dollar spent for each item. This means that the consumer will compare how much additional satisfaction they will receive from buying one more unit of each good with the price they have to pay for it. They will then choose the good with the highest marginal utility per dollar spent until they cannot afford to buy any more of that good or until the marginal utility per dollar spent of each good is equal. Therefore, the best choice is B.

When Making a Decision Between Purchasing Two Goods, What Does