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In the single-commodity case, a consumer is in equilibrium when the marginal utility of the good is:
Aequal to its price
Bgreater than its price
Cat its maximum
Dequal to zero
Answer & Solution
Correct answer: A. equal to its price
1. The consumer keeps buying a good until its marginal utility equals its market price.
2. At that quantity, $MU_x = P_x$ and satisfaction is maximised.
3. If MU exceeds price he buys more, MU is not zero at this point, and maximum MU occurs at the first unit, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.7_
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