if the marginal utility of a commodity is equal to its price then

Economics

WAEC 2018

A. the consumer is in equilibrium
B. more of the commodity can be consumed
C. total utility is also equal to its price
D. the market is not in equilibrium

WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709

Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts

Correct Answer: Option C

Explanation

The price a consumer is willing to pay for a good depends on his marginal utility, the marginal utility declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price is equal to the marginal utility

Previous Next

Go back to Econs classroom

Report an Error Ask A Question Download App