-Suppose the consumer has allocated his or her entire budget. Which of the following conditions is also required for total utility to be maximised?
A) Marginal utility has decreased to zero for all goods.
B) The number of units of each good consumed must be the same.
C) The least inexpensive combination of goods has been purchased.
D) The marginal utility for each good is equal.
E) The marginal utility divided by price for each good is equal.

Question

-Suppose the consumer has allocated his or her entire budget. Which of the following conditions is also required for total utility to be maximised?
A) Marginal utility has decreased to zero for all goods. 
B) The number of units of each good consumed must be the same. 
C) The least inexpensive combination of goods has been purchased. 
D) The marginal utility for each good is equal. 
E) The marginal utility divided by price for each good is equal.

Quizplus · Accepted Answer

For total utility to be maximized, the consumer should allocate their budget such that the marginal utility per dollar spent is equal across all goods. This ensures the most efficient use of the budget to maximize satisfaction.

-Suppose the Consumer Has Allocated His or Her Entire Budget