According to marginal utility theory, for a consumer to reach equilibrium in case of two goods, $\frac{M U_{a}}{M U_{b}}$ is equal to _________.

\frac{P_{a}}{P_{b}}

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\frac{P_{b}}{P_{a}}

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\frac{T U_{a}}{T U_{b}}

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none of the above

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Solution

The correct option is A $\frac{P_{a}}{P_{b}}$
The equi-marginal utility principle states that a consumer will be maximizing his total utility when he allocates his fixed money income in such a way that the utility derived from the last unit of money spent on each good a and b is equal.

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According to marginal utility theory, for a consumer to reach equilibrium in case of two goods, MUaMUb is equal to _________.

The correct option is A PaPbThe equi-marginal utility principle states that a consumer will be maximizing his total utility when he allocates his fixed money income in such a way that the utility derived from the last unit of money spent on each good a and b is equal.

According to marginal utility theory, for a consumer to reach equilibrium in case of two goods, $\frac{M U_{a}}{M U_{b}}$ is equal to _________.

The correct option is A $\frac{P_{a}}{P_{b}}$
The equi-marginal utility principle states that a consumer will be maximizing his total utility when he allocates his fixed money income in such a way that the utility derived from the last unit of money spent on each good a and b is equal.