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JAMB Economics 1978 Question 48

Question 48

Theory of Consumer Behaviour

A rational consumer will adjust his spending pattern so that:

  1. A.he buys only the one item that gives him the most total satisfaction
  2. B.the marginal utility he gets from the last unit of each item is the same
  3. C.the marginal utility he gets from the last naira spent on each item is the same
  4. D.the total utility he gets from each item is the same
  5. E.the total amount of money he spends on each item is the same.
Show the answer and explanation

Answer: C (the marginal utility he gets from the last naira spent on each item is the same)

Explanation

A consumer maximises satisfaction when the last naira spent on each good gives equal marginal utility (equi-marginal principle).