Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-Total utility is maximized when _____.
A)the marginal utility is maximized
B)the marginal utility is the same for all goods consumed
C)the marginal utility per dollar expenditure is maximized
D)the marginal utility per dollar expenditure is the same for all goods consumed
E)any change in purchases from good A to good B reduces marginal satisfaction

Question

Quizplus · Accepted Answer

Total utility is maximized when the marginal utility per dollar spent is equal across all goods, ensuring that the consumer is allocating their budget in the most efficient way possible to maximize satisfaction.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation