A consumer will maximize utility when
A) the marginal utility per dollar of the last item of each good consumed is the same.
B) he or she consumes as much as possible of his or her favorite good.
C) the marginal utility of the last item of each good consumed is the same.
D) the marginal utility of the last item of each good is exactly zero.

Question

Quizplus · Accepted Answer

Maximizing utility means obtaining the most satisfaction possible with the limited income or resources a consumer has. In order to do so, the consumer must allocate their spending among the different goods and services they consume. The key to doing this optimally is to equate the marginal utility per dollar for each good. This means that the additional satisfaction gained from the last dollar spent on each good is equal. Therefore, choice A is the correct answer.

A Consumer Will Maximize Utility When