Question on: JAMB Economics - 2024
If the marginal utility of commodity is equal to its price, then
A
the market is not in equilibrium
B
more of the commodity can be consumed
C
total utility is also equal to its price
D
the consumer is in equilibrium
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Correct Option: D
The consumer is in equilibrium when the marginal utility of a good equals its price. This is because the consumer is maximizing their satisfaction (utility) given their budget constraint.
- Marginal Utility (MU): The additional satisfaction from consuming one more unit.
- Price (P): The monetary cost of one unit of the good.
- Consumer Equilibrium: Occurs when \( MU = P \), meaning the consumer has no incentive to change their consumption pattern.
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