Question

When price of both the commodities is same, the consumer attains maximum satisfaction where ________.

• A. $\frac{M{U}_X}{M{U}_Y}>\frac{P_X}{P_Y}$
• B. $\frac{M{U}_X}{P_X}<\frac{M{U}_Y}{P_Y}$
• C. $\frac{M{U}_X}{P_X}>\frac{M{U}_Y}{P_Y}$
• D. $M{U}_X=M{U}_Y$

Answer 1

The correct option is D $M{U}_X=M{U}_Y$

When consumer consumes two commodities and their prices are the same, then equilibrium is achieved when consumer equates marginal utility derived from one commodity with the marginal utility derived from another commodity.