Question

At a consumer optimum, for all goods purchased, marginal utility per dollar spent is equalized. A high school student is deciding between attending Western State University and Eastern State University. The student cannot attend both universities simultancously. Both are fine universities, but the reputation of Western is slightly higher, as is the tuition. Use the rule of consumer optimum to explain how the student will go about deciding which university to attend.

Short answer

As a result, a student decides to attend Western State University.

Step-by-step solution

    Introduction 

Consumer Optimum can be described as the set of product options that optimises the consumer's degree of happiness when money is limited.

    Explanation  

A student will choose Western State University over Eastern State University because of the university's better reputation. Western State University charges a greater tuition than Eastern State University.

Comment

    Conclusion

One thing to keep in mind is that the consumer will always buy the things that have the highest marginal utility per dollar spent. A student's marginal utility per dollar spent at Western State University is higher here. As a result, a student decides to attend Western State University.