Based on the material presented in the chapter, can we conclude that people will consume goods until the marginal utility of each good is zero?
A) Yes, because at that point total utility is maximum.
B) Yes, because at that point marginal utility is minimum.
C) No, because consumption is determined by total utility.
D) No, because consumption is determined by the marginal utility/price ratio.

Question

Quizplus · Accepted Answer

People will consume goods until the marginal utility per dollar spent is equal across all goods. This is because people want to maximize their total utility while spending their income efficiently. Therefore, consumption is determined by the marginal utility/price ratio, not just the marginal utility of each good.

Based on the Material Presented in the Chapter, Can We