Question

A rational buyer will: buy a product until the marginal benefit of consuming the product is less than the price of the product. buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product. not consider costs versus benefits when purchasing a product. keep buying a product until marginal benefit equals price.

Answer 1

keep buying a product until marginal benefit equals price

Step-by-step explanation:

A rational consumer would continue to consume a product until the marginal benefit of the last unit consumed equal marginal cost. At this point, utility is maximised.

For example, if the price of a bottle of water is $4. The utility you derive from the first bottle is 6. So you consume one more bottle, the utility you derive from the second bottle is 5. you buy a third bottle. The utility you derive from the 3rd bottle is 4. At this point utility is maximised and you should stop consuming more water

If you consume a 4th bottle, the utility you would derive from it would be 3 utils. This doesn't make sense because you are paying more for the bottle when compared to the utility you would derive from it