Final answer:
The condition to know that we have optimized our consumption bundle is when the ratio of the marginal utility to the price of good A equals the ratio of the marginal utility to the price of good B (MUA/P A = MUB/P B). This signifies consumer equilibrium and ensures maximum satisfaction within the constraints of a budget.
Step-by-step explanation:
To know we have optimized our consumption bundle, we will find MUA/P A = MUB/P B, where MUA and MUB represent the marginal utility of good A and good B respectively, and P A and P B are the prices of these goods. This demonstrates the principle that the marginal utility per dollar should be equal across all goods in the consumption bundle. This is the condition for consumer equilibrium, which ensures that consumers are maximizing their total utility given their budget constraint.When this equality holds, consumers have no incentive to reallocate their spending, as doing so would not increase their overall satisfaction. This concept stems from the idea of diminishing marginal utility, which suggests that each additional unit of a good consumed provides less utility than the previous unit. Economists use this principle alongside a budget constraint to determine the optimal combination of goods that a consumer can afford, thereby achieving maximum total utility.In conclusion, the main answer to the student's question is A. The explanation provided describes how the marginal utility per dollar spent on each good should be equal for a consumer to be in equilibrium with their consumption choices. This is a cornerstone of understanding consumer behavior and the optimization of resource allocation in microeconomic theory.