Question

a consumer maximizes personal satisfaction when allocating money income in such a way that the last dollars spent on each good or service yields equal amounts of marginal utility.
a. false
b. true

Explanation:

The principle of consumer equilibrium (maximizing satisfaction) in microeconomics states that a consumer maximizes utility when the marginal utility per dollar spent on each good is equal. Mathematically, this is expressed as $\frac{MU_x}{P_x}=\frac{MU_y}{P_y}$, where $MU$ is marginal utility and $P$ is price. When the last dollar spent on each good gives equal marginal utility (or marginal utility per dollar, considering price), the consumer is in equilibrium. So the statement is correct.

Answer:

B. True