Economics Marginal Utility Questions
Marginal utility per dollar refers to the additional satisfaction or benefit a consumer derives from spending an additional dollar on a particular good or service. It is calculated by dividing the marginal utility (change in total utility) of a good by its price. This concept helps consumers make rational decisions by comparing the additional utility gained from consuming one more unit of a good to the price they have to pay for it. Consumers tend to maximize their utility by allocating their limited income towards goods with the highest marginal utility per dollar, ensuring they get the most satisfaction from their spending.