Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose 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
Let's break down why this is correct
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
Practice Similar Questions
Test your understanding with related questions
1
Question 1If the relationship between budget allocation and consumer satisfaction can be represented as Apples:Utility :: Oranges: ? What is the missing term that best completes the analogy based on the concept of Marginal Utility Per Dollar?
mediumEconomics
Practice
2
Question 2If a consumer is maximizing utility with a budget of $20, which combination of apples and oranges maximizes total utility given the marginal utilities and prices?
mediumEconomics
Practice
3
Question 3If the price of oranges increases significantly, what is the most likely effect on the quantity of oranges demanded by consumers?
easyEconomics
Practice
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