Final answer:
A consumer maximizes utility when the marginal utility per dollar is equal across all goods consumed, signified by the equation MU₁/P₁ = MU₂/P₂ = ... = MUₙ/Pₙ, indicating the consumer's equilibrium point.
Step-by-step explanation:
A consumer is maximizing her utility with a particular money income when the conditions in option B are met, which states that MU₁/P₁ = MU₂/P₂ = ... = MUₙ/Pₙ. This rule suggests that the consumer has reached an optimal choice of consumption where the marginal utility per dollar spent on each good is equal, thus equalizing the satisfaction gained from the last dollar spent on each good. This is known as the consumer equilibrium point on the budget line.
The concept of diminishing marginal utility is also important to understand, as it implies that each additional unit of a good consumed provides less additional utility than the previous one. In maximizing utility, a consumer must consider not only the additional satisfaction (marginal utility) provided by one additional unit of consumption but also the current prices of goods to determine the marginal utility per dollar.