Question

The consumer is in equilibrium and is consuming commodity$-X$ only. The marginal utility from last unit consumed of commodity$-X=50$ utils and $M{U}_M=10$. Find the price of the commodity$-X$.

• A. Rs. 5
• B. Rs. 40
• C. Rs. 10
• D. Rs.4

Answer 1

The correct option is A Rs. 5

Marginal utility of money refers to the utility per unit of money spent which is calculated by dividing marginal utility of last unit consumed by the price of the commodity. Therefore, the price of the commodity will be marginal utility of last unit consumed by marginal utility of money.

Price = 50/10 = Rs. 5.