📚 Learning Guide
Marginal Benefit Calculation
medium

Arrange the following steps in the correct order for calculating Marginal Benefit per Dollar to optimize spending: A) Determine the marginal benefit of each good B) Divide the marginal benefit by the price of each good C) Compare the Marginal Benefit per Dollar across goods D) Make a purchase based on the highest Marginal Benefit per Dollar

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

A → B → C → D

B

B → A → C → D

C

C → D → A → B

D

D → C → B → A

Understanding the Answer

Let's break down why this is correct

Answer

To calculate the Marginal Benefit per Dollar and optimize spending, start by determining the marginal benefit of each good. This means figuring out how much extra satisfaction or value you get from consuming one more unit of each item. Next, divide the marginal benefit by the price of each good to find out how much benefit you get for each dollar spent. After calculating this, compare the Marginal Benefit per Dollar across the different goods to see which one gives you the most value for your money. Finally, make a purchase based on the highest Marginal Benefit per Dollar to ensure you are getting the best deal possible.

Detailed Explanation

First, you find out how much extra happiness or benefit you get from each good. Other options are incorrect because This option suggests starting with the price before knowing the benefit; This option puts comparison before calculating benefits.

Key Concepts

Marginal Benefit Calculation
Consumer Optimization
Utility Maximization
Topic

Marginal Benefit Calculation

Difficulty

medium level question

Cognitive Level

understand

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