Question

In making decisions about what to consume, a person's goal is toA) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility.B) buy low-priced goods rather than high-priced goods.C) maximize her marginal utility from the goods and services she wishes to buy using her limited income.D) consume as many necessities as possible and then, if there is money left over, to buy luxuries.

Answer 1

Answer: Option (C) is correct.

Explanation:

While making decisions about the consumption, a person wishes to maximize their marginal utility drive from every unit rather than total utility.

Marginal utility refers to the satisfaction that a consumer can get from the consumption of one additional unit of goods and services.

So, consumer wants to maximize marginal utility from the products that he/she is buying with the limited level of income. They want to utilize their limited income in a best possible manner.