to maximize utility, a consumer should allocate money income so that the
Ā
A. elasticity of demand on all products purchased is the same
B. marginal utility obtained from the last dollar spent on each product is the same
C. total utility derived from each product consumed is the same
D. marginal utility of the last unit of each product consumed is the same.
to maximize utility, a consumer should allocate money income so that the
Ā
A. elasticity of demand on all products purchased is the same
B. marginal utility obtained from the last dollar spent on each product is the same
C. total utility derived from each product consumed is the same
D. marginal utility of the last unit of each product consumed is the same.
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3. Amy is shopping at a dollar store. She is currently buying 5 bracelets that cost $1 each and 4 sodas that cost $1 each. The table below indicates the marginal utility she obtains when she purchases this combination.
| Quantity | Price per Unit | MU per unit | |
| Bracelets | 5 | $1 | 30 |
| Sodas | 4 | $1 | 40 |
A consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Is this consumer maximizing her utility?
If not, should she consume more bracelets or more sodas? Explain.
Answer the following assuming that one more bracelet is purchased and one less soda is consumed:
Recall the law of diminishing marginal utility. What happens to the Marginal Utility of bracelets and the Marginal Utility of soda?
What happens to the Total Utility received?
What happens to the total dollars spent?
