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WAEC Economics 2023 Question 13

Question 13

Theory of Consumer Behaviour

When the marginal utility from the consumption of commodity X (MUx) is greater than the price of commodity X (Px), a rational consumer should

  1. A.consume more of commodity X.
  2. B.reduce consumption of commodity X.
  3. C.consume the same quantity of commodity X.
  4. D.strive to remain in disequilibrium.
Show the answer and explanation

Answer: A (consume more of commodity X.)

Explanation

Each extra unit is worth more than it costs, so buying more raises satisfaction until MU = P.