To maximize utility, a consumer should allocate money income so that the
A)elasticity of demand on all products purchased is the same.
B)marginal utility obtained from the last dollar spent on each product is the same.
C)total utility derived from each product consumed is the same.
D)marginal utility of the last unit of each product consumed is the same.

Question

Quizplus · Accepted Answer

To maximize utility, a consumer should allocate their money income so that the marginal utility per dollar spent on each product is equal. This ensures that the consumer is getting the maximum satisfaction possible from their spending, as no reallocation of spending could give them more utility. This principle is known as the equi-marginal principle.

To Maximize Utility, a Consumer Should Allocate Money Income So