Question 14
Theory of DemandA consumer of a single commodity is in equilibrium when
- A.he can equate his demand with price
- B.he equates marginal utility and price
- C.he can equate his marginal and total utilities
- D.his marginal utility is equal to zero
Show the answer and explanation
Answer: B (he equates marginal utility and price)
Explanation
For one good, equilibrium is where MU = price.