Learning Path
Question & Answer
Choose the Best Answer
2 → 1 → 3 → 4
1 → 2 → 3 → 4
3 → 2 → 1 → 4
4 → 3 → 2 → 1
Understanding the Answer
Let's break down why this is correct
First you must know how much money you have, so the budget step comes first. Other options are incorrect because This order puts the calculation of marginal utility before knowing how much you can spend, so you might choose a good that costs more than your budget allows; It starts by comparing utilities before you even check your money, so you could compare a good you can’t afford.
Key Concepts
Optimal Purchase Combinations
medium level question
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Deep Dive: Optimal Purchase Combinations
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Definition
Optimal purchase combinations refer to the most efficient mix of goods a consumer can buy based on marginal utility per dollar. By comparing the marginal utility of different goods to their prices, consumers aim to maximize total utility within budget constraints. Understanding optimal purchase combinations helps individuals make rational consumption choices.
Topic Definition
Optimal purchase combinations refer to the most efficient mix of goods a consumer can buy based on marginal utility per dollar. By comparing the marginal utility of different goods to their prices, consumers aim to maximize total utility within budget constraints. Understanding optimal purchase combinations helps individuals make rational consumption choices.
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