Consumers should allocate their scarce income so that
A) the marginal utility for all goods consumed is zero.
B) the marginal utility for all goods consumed is equal.
C) the marginal utility divided by price is equal for all goods consumed.
D) the marginal utility divided by price is maximized for all goods consumed.

Question

Quizplus · Accepted Answer

The principle of consumer equilibrium suggests that consumers should allocate their scarce income in a way that the marginal utility per dollar spent (marginal utility divided by price) is equal across all goods consumed. This ensures the most efficient use of their income in terms of utility gained.

Consumers Should Allocate Their Scarce Income So That