Asked by
Esteban Pedraza
on Oct 25, 2024
Verified
When a person consumes two goods (A and B) , that person's utility is maximized when the budget is allocated such that:
A) the marginal utility of A equals the marginal utility of B.
B) the marginal utility of A times the price of A equals the marginal utility of B times the price of B
C) the ratio of total utility of A to the price of A equals the ratio of the marginal utility of B to the price of A.
D) the ratio of the marginal utility of A to the price of A equals the ratio of the marginal utility of B to the price of B.
Marginal Utility
A concept in economics that represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.
Budget Allocation
The process of distributing available financial resources among different departments, projects, or sectors within an organization or government.
Utility Maximized
The point at which a consumer achieves the highest level of satisfaction possible, given their budget constraints and the prices of goods and services.
- Acquire knowledge on the notion of consumer behavior and how decisions are made to achieve utility maximization.
- Comprehend the concept of marginal utility and its impact on consumer decision-making.
Verified Answer
MS
Learning Objectives
- Acquire knowledge on the notion of consumer behavior and how decisions are made to achieve utility maximization.
- Comprehend the concept of marginal utility and its impact on consumer decision-making.