The rule of equal marginal utility per dollar spent suggests that consumers maximize utility by indicates the limited amount of income available to consumers to spend on goods and services. equalizing the marginal utility per dollar spent across goods and services.
What does the equal marginal utility per dollar spent criterion entail? Why is it convenient?
Clams and potatoes both offer the same marginal benefit for every dollar spent on them. According to the optimal consumption rule, all of the items and services in the consumption bundle must have the same marginal utility per dollar spent for the customer to maximize utility.
According to the principle of equal marginal utilities per dollar spent, good A's marginal utility per dollar spent must match good B's marginal utility per dollar spent, and so on until all products and services have equal marginal utilities per dollar spent.
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