Question : Consumer equilibrium is the point at which_________
Option 1: MU < Price
Option 2: MU = Price
Option 3: MU > Price
Option 4: None of the above
Correct Answer: MU = Price
Solution : Where the price of the product equals the marginal utility of that product, the consumer will be most satisfied. The consumer's equilibrium point is this state of maximum satisfaction. Hence marginal utility will be equal to the price.
Question : If a consumer is in equilibrium, the consumer's marginal rate of substitution (MRS) must be equal to:
Option 1: The price of X.
Option 2: The price of Y.
Option 3: The ratio of marginal utilities.
Option 4: The ratio of prices.
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