Question

The maximum price the consumer is willing to pay for a commodity to maximise satisfaction is equal to __________.

• A. marginal utility
• B. total utility
• C. marginal rate of substitution
• D. average utility

Answer 1

Answer: (A)

marginal utility

The maximum price the consumer is willing to pay for a commodity to maximize satisfaction is equal to marginal utility. Beyond this point, when marginal utility becomes lesser than the price the consumer pays, then the consumer's equilibrium point cannot be achieved. Marginal utility is the additional satisfaction which the consumer gets on consuming an additional unit of a commodity.