Question

The law of equi-marginal utility explains the equilibrium of a consumer when he consumes a single commodity.

• A. True
• B. False

Answer 1

The correct option is B False

The law of equi-marginal utility states that the consumer would equally distribute his income across all goods to receive the highest utility from the last rupee he spends. Therefore, it is not just a single good, but its is across all kinds of goods. This helps us understand the consumers equilibrium as it not only helps us understand the consumer budget line, but also his indifference curve which gives us the consumers equilibrium.