In consumer equilibrium,a consumer equates the
A)total utility from each good.
B)marginal utility from each good.
C)total utility per dollar on each good.
D)marginal utility per dollar on each good.
E)total income spent on each good with total utility from each good.

Question

Quizplus · Accepted Answer

Consumer equilibrium occurs when a consumer allocates their income across different goods in such a way that the marginal utility per dollar spent is the same for all goods. In other words, the consumer is maximizing their satisfaction or utility per dollar spent. This is achieved by equating the marginal utility per dollar on each good, which is the ratio of the marginal utility of a good to its price. Therefore, the correct choice is D, which states that a consumer equates the marginal utility per dollar on each good.

In Consumer Equilibrium,a Consumer Equates the