Question

When choosing among products, consumers look at

Multiple Choice

• The marginal utility per dollar and their budget constraint.

• The marginal utility of the good.

• The total utility that will be gained at the end of all consumption.

• Only their budget.

Answer 1

When choosing among products, the consumers look at the marginal utility per dollar and their budget constraint. The consumer attains maximum utility when the marginal utility per dollar is same for all the goods the consumer consumes. The consumer always has to look at their budget because only then he can make choice that he can afford.

So neither consumer looks at the marginal utility of the good nor the total utility that will be gained at the end of all consumption nor only there budget when choosing among products.

Hence, first option is correct.