Utility theory assumes that a consumer tries to
A) maximize her average utility.
B) maximize her marginal utility.
C) maximize the difference between total and marginal utility.
D) maximize her total utility.

Question

Quizplus · Accepted Answer

Utility theory assumes that a consumer tries to maximize her total utility. This means that the consumer aims to get as much satisfaction as possible from the goods and services that she consumes. Maximizing total utility requires the consumer to balance the marginal utility gained from each additional unit of a good or service with its price, as the law of diminishing marginal utility implies that the marginal utility of additional units of a good or service declines as the quantity consumed increases.

Utility Theory Assumes That a Consumer Tries to