Asked by Shilpa Heald on Jun 30, 2024
Verified
________ buys so as to make MUx/MUy = Px/Py for all pairs of goods.
A) A utility-minimizing consumer
B) Every consumer
C) A utility-maximizing consumer
D) Only a consumer with an unlimited budget
Utility-Maximizing
The concept in economics and consumer theory where individuals or firms make decisions that lead to the highest level of satisfaction or benefit within their constraints.
- Comprehend the role of the utility maximization rule in the context of consumer choices.
Verified Answer
DK
Damian KohutJul 01, 2024
Final Answer :
C
Explanation :
This equation represents the equality of the marginal utility per dollar spent on two goods (x and y), which is a condition for utility maximization. A utility-maximizing consumer adjusts their consumption to satisfy this condition across all pairs of goods to achieve the highest possible satisfaction from their budget.
Learning Objectives
- Comprehend the role of the utility maximization rule in the context of consumer choices.