📚 Learning Guide
Marginal Utility Per Dollar
easy

If a consumer finds that the marginal utility per dollar spent on apples is greater than that of oranges, what is the most likely cause of this effect?

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Choose the Best Answer

A

The consumer has a higher preference for apples compared to oranges.

B

Apples are cheaper than oranges.

C

The consumer's budget has increased.

D

The marginal utility of oranges has decreased.

Understanding the Answer

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Answer

The consumer’s marginal utility per dollar is higher for apples because each apple gives more extra satisfaction than each orange for the same price, so the apples provide a better “bang for the buck. ” This happens when the consumer’s taste or preference for apples is stronger, or the apples are cheaper, or the consumer has already eaten many oranges so their extra utility from another orange is lower. The diminishing‑utility rule means that after eating several oranges, each additional orange feels less useful, while apples still feel useful. Thus the higher marginal‑utility‑per‑dollar for apples is most likely caused by a stronger preference or lower price relative to oranges.

Detailed Explanation

A higher preference for apples means the consumer gets more satisfaction from each dollar spent on apples. Other options are incorrect because It is easy to think a lower price makes the ratio higher, but the price itself does not change the consumer’s taste; An increase in budget lets the consumer buy more items, but it does not change how much satisfaction one dollar gives.

Key Concepts

Marginal Utility Per Dollar
Consumer Choice
Budget Constraint
Topic

Marginal Utility Per Dollar

Difficulty

easy level question

Cognitive Level

understand

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