Consumers maximize their utility when:
A) the total benefits are greater than total costs.
B) the marginal utility per dollar is equal across all goods consumed and all income is spent.
C) they consume the good on which they place the highest overall value.
D) they diversify their consumption across goods.

Question

Quizplus · Accepted Answer

Consumers maximize their utility when the marginal utility per dollar is equal across all goods consumed and all income is spent. This is known as the principle of equal marginal utility per dollar. This ensures that the consumer is getting the most satisfaction from their spending and allocating their income in the most efficient way possible.

Consumers Maximize Their Utility When