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Consumer stop...

Question

Consumer stops purchasing the additional units of the commodity when:

A

Marginal utility starts declining

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B

Marginal utility becomes negative

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C

Marginal utility is equal to marginal utility of money

(M U x = M U m)

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D

Total utility is increasing

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Solution

The correct option is C Marginal utility is equal to marginal utility of money $(M U x = M U m)$
Consumer stops purchasing when $M U x = P x$ , where, also $M U x = M U m$ .

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Similar questions

Q. Suppose, price of commodity-Y (

P_{Y}

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(and constant). Using the following marginal utility schedule of the consumer, find out equilibrium level of consumption and total expenditure on commodity-Y

Units Consumed	$1$	$2$	$3$	$4$	$5$	$6$
Marginal Utility	$170$	$130$	$110$	$80$	$30$	$0$

Q. Given below is the utility schedule of a consumer for commodity-X. The price of the commodity is Rs. 6 per unit. How many units should the consumer purchase to maximise satisfaction? (Assume that utility is expressed in units and 1 util = Rs. 1). Give reasons for your answer.

Consumption (Units)	Total Utility (Utils)	Marginal Utility (Utils)
1	10	10
2	18	8
3	25	7
4	31	6
5	34	3
6	34	0

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Q. Fill in the blanks with appropriate alternatives given in the bracket:

1. _________________ refers to want satisfying power of a commodity. (Usefulness/ Utility/ Satisfaction/ Happieness)

2. Marginal utility diminishes, as consumption of commodity ________. (increases/ decreases/ remains constant/ become zero)

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