Which one of the following statements is true?
A)Since consumers of a good consume this good until the price equals the value of the last unit, they clearly get no benefit from consuming this good.
B)Consumers choosing between goods X and Y will set MUX = MUY.
C)The value of a good to a consumer is measured by the price.
D)Consumer surplus on a unit of a good will never be zero.
E)If the marginal utility per dollar of good X is less than the marginal utility per dollar of good Y, then the consumer should shift some spending from X to Y.

Question

Quizplus · Accepted Answer

This statement is true according to the principle of diminishing marginal utility. As the consumer spends more on a particular good, the marginal utility (satisfaction) they derive from each additional dollar spent on that good will decrease. Therefore, if the marginal utility per dollar of good X is less than the marginal utility per dollar of good Y, the consumer should shift some spending from X to Y in order to obtain more overall satisfaction (utility) from their spending.

Which One of the Following Statements Is True