To achieve the highest total utility, a consumer should compare the __________ of different goods to their prices.

Question

Seekh · Accepted Answer

To get the most enjoyment from their budget, a consumer should compare each good’s marginal utility—how much extra satisfaction it gives—to the price of that good. This comparison is usually expressed as marginal utility per dollar, which tells the consumer how many units of satisfaction they receive for each dollar spent. By equalizing this ratio across all goods, the consumer ensures that every dollar spent yields the same increase in total utility. For example, if a pizza slice gives 10 units of satisfaction and costs $2, its marginal utility per dollar is 5; if a soda gives 6 units for $1, its ratio is 6, so the consumer should buy soda first until the ratios equalize. This method guarantees the highest total utility for a given budget.

To achieve the highest total utility, a consumer should compare the __________ of different goods to their prices.

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Deep Dive: Optimal Purchase Combinations

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