A Consumer with a Fixed Income Will Maximize Utility When

question 314

Multiple Choice

A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the

• A)total utility is the same for each good.
• B)marginal utility of each good is maximized.
• C)marginal utility per dollar spent is the same for all goods.
• D)marginal utility per dollar spent is maximized for each good.

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Definitions:

Utility-maximizing

A principle in economics where consumers aim to get the greatest satisfaction from their spending, given their budget constraint.

Goods

Tangible items that are produced and are capable of being physically delivered to a consumer.

Px(MUx)

This expression denotes the price of a good (Px) multiplied by its marginal utility (MUx), commonly used in economic analysis of consumer choice.

MUx/MUy

Represents the marginal utility of good x relative to the marginal utility of good y, often used in consumer choice theory to analyze optimum consumption points.