Learning Path
Question & Answer
Choose the Best Answer
Spend all on the good providing the highest marginal utility per dollar
Buy equal amounts of both regardless of their prices
Prioritize the cheaper good first before considering the other
Divide the budget equally between both goods regardless of utility
Understanding the Answer
Let's break down why this is correct
When you compare how many extra happiness points you get for each dollar spent on apples versus oranges, you choose the one with the higher value. Other options are incorrect because Many think buying equal amounts is best, but it ignores how much extra happiness you get per dollar; Some people think the cheaper fruit should be bought first because it saves money.
Key Concepts
Marginal Utility Per Dollar
easy level question
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Deep Dive: Marginal Utility Per Dollar
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Definition
Marginal Utility Per Dollar is a concept in Economics that helps consumers maximize utility by considering the additional satisfaction gained from spending one more dollar on each good. In this scenario, the consumer chooses the combination of apples and oranges that provides the highest marginal utility per dollar spent within the budget constraint of $7, demonstrating rational consumer decision-making.
Topic Definition
Marginal Utility Per Dollar is a concept in Economics that helps consumers maximize utility by considering the additional satisfaction gained from spending one more dollar on each good. In this scenario, the consumer chooses the combination of apples and oranges that provides the highest marginal utility per dollar spent within the budget constraint of $7, demonstrating rational consumer decision-making.
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