Question : In the cardinal utility approach, the consumer's equilibrium is achieved when:
Option 1: Total utility is maximized.
Option 2: Marginal utility is maximized.
Option 3: Marginal utility equals zero.
Option 4: Marginal utility per dollar spent is equal across all goods.
Correct Answer: Marginal utility per dollar spent is equal across all goods.
Solution : The correct answer is (d) Marginal utility per dollar spent is equal across all goods
By allocating their limited budget in such a way that the marginal utility per dollar spent on each good is the same, the consumer maximizes their overall satisfaction or utility. This ensures an efficient allocation of resources based on the consumer's preferences and the prices of goods.
