Total utility is maximized in the consumption of two goods by
A)equating the marginal utility for each good consumed.
B)equating the marginal utility per dollar spent for each good consumed.
C)equating the total utility of each good divided by its price.
D)maximizing expenditure on each good.

Question

Quizplus · Accepted Answer

Equating the marginal utility per dollar spent for each good consumed ensures that the consumer is getting the maximum satisfaction for the amount of money they are spending on each good. This is achieved by comparing the additional satisfaction gained from consuming one more unit of each good with their respective prices. The goal is to allocate the consumer's budget in a way that maximizes overall utility.

Total Utility Is Maximized in the Consumption of Two Goods