Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Purchase Good A because it offers a higher marginal benefit per dollar spent
B
Purchase Good B since it is cheaper regardless of marginal benefit
C
Purchase neither, as both goods do not provide sufficient marginal benefit
D
Purchase both goods because they have positive marginal benefits
Understanding the Answer
Let's break down why this is correct
Answer
To decide which good to buy, the consumer should look at the marginal benefit per dollar spent for each good. For Good A, the marginal benefit is $30, and the price is $10, so the marginal benefit per dollar is $30 divided by $10, which equals $3. For Good B, the marginal benefit is $20, and the price is $5, giving a marginal benefit per dollar of $20 divided by $5, which equals $4. Since Good B provides a higher marginal benefit per dollar than Good A, the consumer's optimal choice is to purchase Good B to get more value for their money. This means that by choosing Good B, the consumer maximizes their satisfaction based on the benefits they receive compared to what they pay.
Detailed Explanation
To find the best choice, we look at how much benefit we get for each dollar spent. Other options are incorrect because Some might think cheaper is always better; This choice suggests that neither good is worth buying.
Key Concepts
Marginal Benefit Calculation
Consumer Choice Optimization
Utility Maximization
Topic
Marginal Benefit Calculation
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.