Consumer is said to be in equilibrium, maximizing his total utility, when

the marginal utilities of the two goods consumed are equal.

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the proportions of the marginal utilities and respective prices are equal.

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the consumer gets full satisfaction from the consumption.

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the consumer feels satisfied with his expenditure on the various goods.

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Solution

The correct option is B the proportions of the marginal utilities and respective prices are equal.
According to the law of equi-marginal utility, a consumer is said to be in equilibrium when the ratio of the marginal utilities of the two commodities and their respective prices are equal. This means that the MU of the last rupee spent on each commodity is the same.

The equation it should satisfy is: MU_X/P_X= MU_Y/P_Y

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