The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

-According to utility theory, a consumer is in equilibrium when:
A)total income is spent.
B)marginal utility per dollar spent for a good is maximized.
C)total utility per unit of a good is maximized.
D)total utility per dollar spent is equal for all goods.
E)marginal utility per dollar spent is equal for all goods.

Question

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3
 
-According to utility theory, a consumer is in equilibrium when:
A)total income is spent. 
B)marginal utility per dollar spent for a good is maximized. 
C)total utility per unit of a good is maximized. 
D)total utility per dollar spent is equal for all goods. 
E)marginal utility per dollar spent is equal for all goods.

Quizplus · Accepted Answer

According to utility theory, a consumer reaches equilibrium when the marginal utility per dollar spent is equal for all goods. This means that the consumer has allocated their budget in such a way that they cannot increase their total utility by reallocating their spending.

The Below Table Shows the Average Utility (In Utils) Obtained