Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Calculate the marginal utility per dollar spent on both apples and oranges.
B
Determine the total utility gained from consuming apples and oranges.
C
Adjust consumption based on the marginal utility comparisons.
D
Allocate the entire budget to one good regardless of utility.
Understanding the Answer
Let's break down why this is correct
Answer
To maximize total utility when choosing between apples and oranges, a consumer should first understand the concept of marginal utility, which is the additional satisfaction gained from consuming one more unit of a good. Next, they should evaluate how much satisfaction each fruit provides and compare the marginal utility per dollar spent on apples versus oranges. For example, if an apple gives 10 units of satisfaction and costs $1, while an orange gives 6 units of satisfaction and costs $0. 50, the apple provides a higher marginal utility per dollar. The consumer should then allocate their budget in a way that they consume apples and oranges until the marginal utility per dollar spent is equal for both fruits.
Detailed Explanation
To get the most satisfaction, you need to see how much happiness each fruit gives you for every dollar spent. Other options are incorrect because Just knowing the total happiness from both fruits isn't enough; Adjusting what you buy is important, but you first need to know how much happiness each fruit gives you per dollar.
Key Concepts
Marginal Utility
Consumer Choice
Budget Constraint
Topic
Marginal Utility and Consumer Choice
Difficulty
medium level question
Cognitive Level
understand
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