Question

When does a consumer achieve the highest total satisfaction?

Options

• By spending only on one good

• By spending so that MU/P is equal for all goods

• By increasing spending on goods with lower prices

• By buying the same number of every good

Answer 1

By spending so that MU/P is equal for all goods

Explanation:

Total satisfaction is maximised when the marginal utility per rupee is the same for all goods.