Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Buy more of good X and less of good Y.
B
Buy equal amounts of both goods.
C
Buy more of good Y since it may be on sale.
D
Ignore marginal utility and spend equally on both.
Understanding the Answer
Let's break down why this is correct
Answer
When a consumer looks at how much satisfaction they get from spending their money on two different goods, they want to get the most value for each dollar spent. If good X gives them more satisfaction per dollar than good Y, it means that they are getting a better deal with good X. To maximize their overall happiness, the consumer should buy more of good X and less of good Y. For example, if good X is a delicious sandwich that costs $5 and gives them 10 units of satisfaction, while good Y is a drink that costs $2 and gives them 3 units of satisfaction, the sandwich offers better value. By focusing on good X, the consumer can enjoy more satisfaction from their budget.
Detailed Explanation
Good X gives you more happiness for each dollar you spend. Other options are incorrect because Buying equal amounts ignores the fact that good X is a better deal; Just because good Y is on sale doesn't mean it's a better choice.
Key Concepts
Marginal Utility
Budgeting
Consumer Choice
Topic
Marginal Utility and Budgeting
Difficulty
easy level question
Cognitive Level
understand
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