Question

In case of single commodity, consumer’s equilibrium is achieved when ______.

Options

• MU_x > P_x

• MU_x < P_x

• MU_x ≠ P_x

• MU_x = Р_x

Answer 1

In case of single commodity, consumer’s equilibrium is achieved when MU_x = Р_x.

Explanation:

For a single commodity, equilibrium is reached when marginal utility expressed in money equals its price. If MU is higher or lower than price, the consumer has reason to adjust consumption.