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WAEC Economics 2018 Question 14

Question 14

Theory of Consumer Behaviour

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

  1. A.the consumer is in equilibrium.
  2. B.more of the commodity can be consumed.
  3. C.total utility is also equal to its price.
  4. D.the market is not in equilibrium.
Show the answer and explanation

Answer: A (the consumer is in equilibrium.)

Explanation

For one good, the consumer is in equilibrium when MU = price.