According to the utility theory, in "consumer equilibrium," households have:
A)consumed as much of every commodity as they would like.
B)spent their incomes in such a way that their overall satisfaction is maximized.
C)spent their incomes in such a way that their marginal utility is maximized.
D)spent their incomes in such a way that their marginal utility is zero for every product consumed.
E)spent their incomes in such a way that their total utility is zero.

Question

According to the utility theory, in "consumer equilibrium," households have:​
A)consumed as much of every commodity as they would like.
B)spent their incomes in such a way that their overall satisfaction is maximized.
C)spent their incomes in such a way that their marginal utility is maximized.
D)spent their incomes in such a way that their marginal utility is zero for every product consumed.
E)spent their incomes in such a way that their total utility is zero.

Quizplus · Accepted Answer

According to the utility theory, in "consumer equilibrium," households have spent their incomes in such a way that their overall satisfaction is maximized. This means that the household has allocated their spending across different goods and services in a way that they are getting the most possible utility (satisfaction) from their spending. This is different than maximizing marginal utility or total utility, which are not necessarily the same as overall satisfaction.

According to the Utility Theory, in "Consumer Equilibrium," Households Have:​

According to the Utility Theory, in "Consumer Equilibrium," Households Have: