A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the
A)total utility is the same for each good.
B)marginal utility of each good is maximized.
C)marginal utility per dollar spent is the same for all goods.
D)marginal utility per dollar spent is maximized for each good.

Question

Quizplus · Accepted Answer

The consumer maximizes utility when the marginal utility per dollar spent is the same for all goods, ensuring that the last dollar spent on each good provides the same amount of additional satisfaction, leading to an optimal allocation of their budget.

A Consumer with a Fixed Income Will Maximize Utility When