ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marginal Utility/Price is equal for all the goods/services they purchase
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Marginal Utility is equal for all goods
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Price/Marginal Utility is equal for all the goods/services they purchase
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Marginal Utility is as high as possible for all the goods they purchase.
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Detailed explanation-1: -Total Utility is maximum only when marginal utility is zero, because at that point any additional unit consumed will lead to a decrease in overall satisfaction.
Detailed explanation-2: -A consumer will pay the price which will be less or equal to the marginal utility of a good consumed, price higher than the marginal utility will incur loss to a consumer.
Detailed explanation-3: -If a consumer wants to maximize total utility, for every dollar that they spend, they should spend it on the item which yields the greatest marginal utility per dollar of expenditure.
Detailed explanation-4: -Total utility is used to determine a consumer’s decision based on utility maximization in the economic setting. A company’s management should make production changes by analyzing the marginal utility increase or decrease. Consumers try to maximize their utility with every item consumed based on rational choice theory.