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Question : The consumer's equilibrium is attained at the point where:

Option 1: Marginal utility is zero

Option 2: Marginal utility is positive

Option 3: Marginal utility is equal to price

Option 4: Marginal utility is equal to income


Team Careers360 19th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Marginal utility is equal to price


Solution : The correct answer is (b) Marginal utility is positive.

The consumer's equilibrium is attained at the point where the marginal utility of the last unit of a good consumed is positive. This means that the consumer is deriving additional satisfaction or utility from consuming that unit of the good. At this point, the consumer has allocated their resources in a way that maximizes their overall satisfaction, given their budget constraint and the prices of the goods. It is important to note that marginal utility is not necessarily equal to price or income in consumer equilibrium.

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