The optimal consumption rule for all goods requires:
A) the marginal utility of all goods consumed divided by the price to be equal to the budget constraint.
B) the marginal utility of all goods consumed to exceed the total utility of all goods.
C) the marginal utility of all goods consumed divided by the respective price to be equal.
D) the prices of all goods to be equal.

Question

Quizplus · Accepted Answer

The optimal consumption rule states that consumers maximize their utility when the marginal utility per dollar spent is equal across all goods. This ensures that the last unit of currency spent on each good provides the same level of additional satisfaction.

The Optimal Consumption Rule for All Goods Requires