Consumers maximize their total utility subject to a budget constraint if the
A) total utility is increasing and marginal utility decreasing
B) dollar amount (value) spent on each good is the same
C) total utility gained from each good is equal
D) marginal utility of the last dollar spent on each good is equal
E) total utility equals the total budget constraint

Question

Quizplus · Accepted Answer

Consumers maximize their total utility subject to a budget constraint when the marginal utility per dollar spent on each good is equal. This ensures that no reallocation of spending could increase their total utility, achieving an optimal distribution of their budget across different goods.

Consumers Maximize Their Total Utility Subject to a Budget Constraint