Question 12
Theory of DemandA consumer purchasing a commodity X will maximize his satisfaction if
- A.Px = MUx
- B.Px ≥ MUx
- C.Px > MUx
- D.Px < MUx
Show the answer and explanation
Answer: A (Px = MUx)
Explanation
Satisfaction is maximised when the marginal utility of the last unit equals its price.