📚 Learning Guide
Consumer Utility Maximization
medium

In the context of consumer utility maximization, consumers will continue to allocate their resources until the ________ of the last unit consumed equals the price paid for that unit.

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Learning Path

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Choose the Best Answer

A

total utility

B

marginal utility

C

average utility

D

opportunity cost

Understanding the Answer

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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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