To maximize utility, the amount that a consumer is willing to pay for one more unit of a good must equal the marginal benefit of that unit of good.

Question

Quizplus · Accepted Answer

This statement is true according to the concept of the law of diminishing marginal utility, which states that as a consumer consumes more and more units of a good, the marginal utility or additional satisfaction they derive from each successive unit decreases. Therefore, in order to maximize their overall satisfaction or utility, a consumer will only be willing to pay the amount that is equal to the marginal benefit they derive from the last unit consumed.

To Maximize Utility, the Amount That a Consumer Is Willing