A consumer maximizes total utility from a given amount of income when the
A) Marginal utility obtained from the last dollar spent on each good is the same.
B) Marginal utility of the last unit of each good is the same.
C) Total utility obtained from each product is the same.
D) Amount spent for each product is the same.

Question

Quizplus · Accepted Answer

The principle of consumer equilibrium or utility maximization states that a consumer allocates their income in such a way that the marginal utility per dollar spent on each good or service is equal. This ensures that the consumer is getting the maximum possible satisfaction from their spending, given their budget constraints. Choices B, C, and D do not accurately describe this principle.

A Consumer Maximizes Total Utility from a Given Amount of Income