The old saying "getting the biggest bang for your buck" means that: A. the real-income effect is equal to the substitution effect. B. consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good. C. consumers maximize their utility. D. consumers spend every dollar in their budget. E. consumers never experience diminishing marginal utility

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Business

Janessa Mercer

28 August, 19:15

The old saying "getting the biggest bang for your buck" means that: A. the real-income effect is equal to the substitution effect. B. consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good. C. consumers maximize their utility. D. consumers spend every dollar in their budget. E. consumers never experience diminishing marginal utility

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Piper Holland · Answer 1

C. consumers maximize their utility.

Explanation:

Maximizing the utility is only possible if the consumer can get maximum satisfaction out of every penny spent on the product. Consumer allocates their money so that they get a return on every allocated money. The condition for maximizing the utility is that a consumer equalizes the marginal utility per dollar spent. Therefore, there is an old saying "getting the biggest bang for your buck".