Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Good A only
B
Good B only
C
Both goods equally
D
None of the goods
Understanding the Answer
Let's break down why this is correct
Answer
To decide which good to prioritize, we need to look at the satisfaction gained from each dollar spent on goods A and B. The marginal utility per dollar spent is calculated by dividing the marginal utility by the price of each good. For good A, the marginal utility per dollar is 15 divided by 5, which equals 3. For good B, the marginal utility per dollar is 10 divided by 2, which equals 5. Since good B gives more satisfaction per dollar spent, the consumer should prioritize buying good B to maximize their overall happiness within the $30 budget.
Detailed Explanation
Good B gives more satisfaction for each dollar spent. Other options are incorrect because Some might think that higher total satisfaction means it's better; People might think buying both is a good idea.
Key Concepts
Marginal Utility
Budgeting
Consumer Choice
Topic
Marginal Utility and Budgeting
Difficulty
easy level question
Cognitive Level
understand
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