Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Good A
B
Good B
C
Both equally
D
None, they should save money
Understanding the Answer
Let's break down why this is correct
Answer
To maximize satisfaction with a budget of $30, the consumer should focus on the good that provides the most utility per dollar spent. In this case, good A gives 5 utils for every dollar, while good B gives only 3 utils. This means good A offers more satisfaction for each dollar spent, making it the better choice. For example, if the consumer spends all $30 on good A, they would receive 150 utils, while spending the same amount on good B would only yield 90 utils. Therefore, prioritizing good A will help the consumer get the most value from their budget.
Detailed Explanation
Good A gives more satisfaction per dollar spent. Other options are incorrect because Some might think good B is a good choice, but it gives less satisfaction per dollar; Choosing both equally ignores the fact that good A gives more satisfaction.
Key Concepts
Marginal Utility
Budgeting
Topic
Marginal Utility and Budgeting
Difficulty
easy level question
Cognitive Level
understand
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