Question

When onion price hits hard, the poor man simply stops buying it. Which one of these is the correct explanation for this?

• A. A rupee spent on buying onions does not yield rupee worth of satisfaction
• B. Price increases without any increase in the income of the consumer
• C. The consumer has already reached equilibrium and is not willing to purchase additional onions
• D. The consumer shifts his priorities to more urgent needs

Answer 1

The correct option is A

A rupee spent on buying onions does not yield rupee worth of satisfaction

A consumer buys a commodity only when a rupee spent on it yields rupee worth of satisfaction $\left(M{U}_M\right)$. A poor man stops the consumption of onion when he finds that a rupee spent on it does not yield rupee worth of satisfaction (no matter what quantity of onions is purchased), so that, $M{U}_x/P_X=M{U}_M$