Learning Path
Question & Answer
Choose the Best Answer
The consumer has a higher preference for apples compared to oranges.
Apples are cheaper than oranges.
The consumer's budget has increased.
The marginal utility of oranges has decreased.
Understanding the Answer
Let's break down why this is correct
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
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Deep Dive: Marginal Utility Per Dollar
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Definition
Marginal Utility Per Dollar is a concept in Economics that helps consumers maximize utility by considering the additional satisfaction gained from spending one more dollar on each good. In this scenario, the consumer chooses the combination of apples and oranges that provides the highest marginal utility per dollar spent within the budget constraint of $7, demonstrating rational consumer decision-making.
Topic Definition
Marginal Utility Per Dollar is a concept in Economics that helps consumers maximize utility by considering the additional satisfaction gained from spending one more dollar on each good. In this scenario, the consumer chooses the combination of apples and oranges that provides the highest marginal utility per dollar spent within the budget constraint of $7, demonstrating rational consumer decision-making.
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