Question

A consumer reaches equilibrium at the point where _________.

• A. MU = P
• B. MU > P
• C. MU < P
• D. TU = P

Answer 1

Answer: (A)

MU = P

A consumer achieves equilibrium when the marginal utility or additional satisfaction which the consumer is deriving out of the commodity is equal to the price of the commodity after which the additional satisfaction in terms of money is less than the price of the commodity and consumer stops buying the commodity anymore.