In order to reach consumer equilibrium, how must a consumer allocate their income?
A) in such a way that the total utility per dollars worth of any good is the same for every good
B) in such a way that the marginal utility per dollars worth of any good is the same for every good
C) in such a way that the total utility per dollars worth of any good is higher for necessities
D) in such a way that the marginal utility per dollars worth of any good is higher for necessities

Question

Quizplus · Accepted Answer

Consumer equilibrium is achieved when the consumer has allocated their income in such a way that the marginal utility per dollars worth of any good is the same for every good. This is because, in equilibrium, the consumer maximizes their total utility subject to their budget constraint. When the marginal utility per dollars worth of each good is equal, the consumer is spending their dollars in the most efficient way possible to achieve this goal.

In Order to Reach Consumer Equilibrium, How Must a Consumer