📚 Learning Guide
Optimal Purchase Combinations
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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.

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
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4
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Choose the Best Answer

A

2 → 1 → 3 → 4

B

1 → 2 → 3 → 4

C

3 → 2 → 1 → 4

D

4 → 3 → 2 → 1

Understanding the Answer

Let's break down why this is correct

Answer

First, the consumer must figure out how much money they have and what that limits in terms of buying goods, which is the budget constraint. Next, they calculate the marginal utility per dollar spent on each good, showing how much extra satisfaction each dollar brings. Then, they compare those marginal utility‑per‑dollar numbers for all goods to see which gives the most benefit per dollar. Finally, they pick the mix of goods that gives the highest total utility while staying within the budget. For example, if apples give 10 MU for $1 and oranges give 8 MU for $1, the consumer would buy more apples until the marginal utility per dollar equalizes or the budget is exhausted.

Detailed Explanation

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
Marginal Utility
Budget Constraints
Topic

Optimal Purchase Combinations

Difficulty

medium level question

Cognitive Level

understand

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