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WAEC Economics 2005 Question 13

Question 13

Theory of Consumer Behaviour

To achieve an equilibrium position, the consumer must buy so much of each commodity whose price is equal to its

  1. A.marginal utility
  2. B.total utility
  3. C.average utility
  4. D.variable utility.
Show the answer and explanation

Answer: A (marginal utility)

Explanation

A consumer is in equilibrium when, for each good, the price paid equals the marginal utility of the last unit (MU = P).