HomeQuestionsEconomicsOptimal Purchase Combinations
📚 Learning Guide
Optimal Purchase Combinations
hard

When considering optimal purchase combinations, which of the following statements are true regarding consumer choices and utility maximization? Select all that apply.

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Consumers should always buy the good with the highest total utility regardless of price.

B

The optimal purchase combination occurs when the marginal utility per dollar spent is equal for all goods purchased.

C

Consumers will maximize their total utility by equalizing the marginal utility per dollar across all goods within their budget constraint.

D

If a good's price decreases, consumers will always increase their consumption of that good without considering other factors.

E

Marginal utility can change based on a consumer's preferences and consumption patterns.

Understanding the Answer

Let's break down why this is correct

Answer

The consumer maximizes utility by spending the whole budget so that no money is left unused. At the optimum the marginal utility per dollar spent on each good is the same; otherwise the consumer could shift spending to increase overall satisfaction. If a good’s marginal utility per dollar is higher than another’s, the consumer will buy more of that good until the ratios equalize. The consumer will never buy a bundle that leaves money unspent if there is a good with positive marginal utility. For example, if apples give 10 utils per dollar and oranges give 5 utils per dollar, the consumer will buy more apples until the marginal utility per dollar of apples equals that of oranges.

Detailed Explanation

People buy the mix of goods that makes the money they spend give the same extra happiness, or marginal utility, for each dollar spent. Other options are incorrect because This says ignore price; Lower price does not automatically mean you buy more.

Key Concepts

Marginal Utility
Budget Constraint
Utility Maximization
Topic

Optimal Purchase Combinations

Difficulty

hard level question

Cognitive Level

understand

Practice Similar Questions

Test your understanding with related questions

1
Question 1

If a consumer is maximizing their total utility by purchasing four apples and four oranges, what underlying reason explains this optimal purchase combination?

easyEconomics
Practice
2
Question 2

Arrange the following steps to determine the optimal purchase combination for maximizing utility: 1) Calculate the marginal utility per dollar for each good, 2) Determine the consumer's budget constraint, 3) Compare the marginal utility per dollar across goods, 4) Choose the combination of goods that maximizes total utility within the budget.

mediumEconomics
Practice
3
Question 3

To achieve the highest total utility, a consumer should compare the __________ of different goods to their prices.

easyEconomics
Practice
View All Optimal-purchase-combinations Questions

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.

Start Learning with SeekhExplore More Optimal Purchase Combinations Questions