With respect to the equimarginal rule,a person will maximize utility when the
A) total utility per dollar spent is equalized across products.
B) marginal utility is equalized across products.
C) total utility is equalized across products.
D) marginal utility per dollar spent is equalized across products.

Question

Quizplus · Accepted Answer

The equimarginal rule states that a person will maximize utility when the marginal utility per dollar spent is equalized across products. This means that the person should allocate their spending in such a way that they get the most utility per dollar spent on each product. If the marginal utility per dollar spent is higher for one product than another, then the person should shift their spending towards the higher marginal utility product until the marginal utility per dollar spent is equalized between the two products. Therefore, the best choice is D, which states that the person will maximize utility when the marginal utility per dollar spent is equalized across products.

With Respect to the Equimarginal Rule,a Person Will Maximize Utility