If a consumer always buys goods rationally, then
A)the total utilities of the different goods consumed will be equal.
B)the average utilities of the different goods consumed will be equal.
C)the marginal utilities per dollar spent on all goods will be equal.
D)the marginal utilities of the different goods consumed will be equal.

Question

Quizplus · Accepted Answer

When a consumer buys goods rationally, they will allocate their budget in such a way that the marginal utility per dollar spent on all goods will be equal. This is known as the equimarginal principle, which states that a consumer will allocate their spending in a way that the last dollar spent on each good yields the same amount of marginal utility. Therefore, C is the correct choice. The other options are not necessarily true, as the total utilities and marginal utilities of different goods may vary, and the average utilities may not be relevant in this case.

If a Consumer Always Buys Goods Rationally, Then