📚 Learning Guide
Marginal Utility and Consumer Choice
easy

Marginal utility is to consumer satisfaction as budget constraint is to which of the following?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Consumption choices

B

Total expenditure

C

Market price

D

Utility maximization

Understanding the Answer

Let's break down why this is correct

Answer

Marginal utility refers to the extra satisfaction a consumer gets from consuming an additional unit of a good or service. Just like marginal utility helps us understand how much enjoyment someone gets from buying more of something, a budget constraint shows the limits of what a consumer can afford to buy. It represents the maximum amount of goods and services a person can purchase based on their income and prices. For example, if someone has $20 and each sandwich costs $5, their budget constraint allows them to buy a maximum of four sandwiches. Therefore, while marginal utility relates to satisfaction from consumption, the budget constraint relates to the limits of purchasing power.

Detailed Explanation

A budget constraint limits how much you can spend. Other options are incorrect because Total expenditure is how much money you spend overall; Market price is what you pay for items.

Key Concepts

Marginal Utility
Consumer Choice
Budget Constraint
Topic

Marginal Utility and Consumer Choice

Difficulty

easy level question

Cognitive Level

understand

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