Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
total utility
B
marginal utility
C
average utility
D
opportunity cost
Understanding the Answer
Let's break down why this is correct
Answer
In consumer utility maximization, consumers aim to get the most satisfaction or "utility" from their spending. They will keep buying different goods and services until the benefit they receive from the last unit they consume is equal to the price they paid for it. This means that if a consumer buys one more slice of pizza, they will stop buying when the enjoyment they get from that slice matches how much they spent on it. For example, if a slice of pizza costs $2 and the consumer feels it gives them $2 worth of satisfaction, they are maximizing their utility. If the satisfaction drops below $2, they would choose to spend their money on something else that gives them better value.
Detailed Explanation
Marginal utility is the extra satisfaction you get from one more unit of something. Other options are incorrect because Total utility is the overall satisfaction from all units consumed; Average utility looks at satisfaction per unit, but it doesn't show the value of just the last unit.
Key Concepts
Consumer Utility Maximization
Marginal Utility
Opportunity Cost
Topic
Consumer Utility Maximization
Difficulty
medium level question
Cognitive Level
understand
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