📚 Learning Guide
Marginal Utility and Consumer Choice
hard

A consumer can maximize total utility by purchasing goods exclusively based on their marginal utility per dollar spent, without considering their budget constraint.

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Learning Path
Learning Path

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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

To maximize total utility, a consumer should focus on the marginal utility per dollar spent, which means they need to look at how much satisfaction they get from each dollar spent on different goods. Marginal utility is the extra satisfaction gained from consuming one more unit of a good. For example, if a consumer finds that buying one more slice of pizza gives them more satisfaction per dollar than buying a soda, they should choose the pizza to maximize their enjoyment. However, it's important to remember that consumers also have a budget constraint, which limits how much they can spend. Ignoring this budget can lead to overspending and not being able to afford other necessary items, ultimately reducing total utility in the long run.

Detailed Explanation

It's important to think about your budget when buying things. Other options are incorrect because Some might think that just looking at satisfaction per dollar is enough.

Key Concepts

Marginal Utility
Consumer Choice
Budget Constraint
Topic

Marginal Utility and Consumer Choice

Difficulty

hard level question

Cognitive Level

understand

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