For the consumer to act rationally (i.e., achieve the greatest amount of satisfaction), he or she must:
A)maximize the sum of the marginal utilities of the last unit purchased of all goods in his or her budget.
B)equalize the marginal utilities of the last unit purchased of all commodities.
C)purchase no inferior goods.
D)equalize the marginal utilities of the last dollar spent upon each commodity or service purchased.
E)do none of the above.

Question

Quizplus · Accepted Answer

The rational consumer should aim to allocate their budget in a way that the marginal utility per dollar spent is equal across all goods and services purchased. This ensures that the consumer is getting the most satisfaction out of each dollar spent. Maximizing the sum of marginal utilities or equalizing the marginal utilities of all commodities is likely to lead to overspending on some goods and services and underspending on others, resulting in less overall satisfaction. Avoiding inferior goods is also a good strategy but not necessary for rationality.

For the Consumer to Act Rationally (I