Principles of Microeconomics / Unit 5 MIC 0406 short lesson, about 20 seconds
The Utility-Maximizing Rule
Captions available
The idea
Spending the whole budget, a consumer maximizes utility when marginal utility per dollar is equal across goods; if one is higher, moving a dollar there raises utility until the ratios meet.
In practice
At the best bundle the last dollar buys the same satisfaction anywhere.
Where people slip
Equal per dollar, not equal marginal utility: a good costing twice as much must give twice the utility.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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