Under the law of equi-marginal utility, a consumer spending on goods X…

Question

Under the law of equi-marginal utility, a consumer spending on goods X and Y is in equilibrium when:

Accepted Answer

D. MUx/Px equals MUy/Py

1. The law of equi-marginal utility requires the marginal utility per rupee to be equal across goods.
2. This is the condition $\frac{MU_x}{P_x} = \frac{MU_y}{P_y}$.
3. Equating MUs or prices directly ignores the differing prices, and the product form is incorrect, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.7_

Answer

MUx times Px equals MUy times Py

Answer

MUx equals MUy directly

Answer

Px equals Py directly

Under the law of equi-marginal utility, a consumer spending on goods X and Y is in equilibrium when:

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