Question 41
MediumOriginal questionWith one good X, a consumer is in equilibrium where
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
The last rupee spent on X must give as much utility as a rupee kept: MUₓ ÷ Pₓ = MUₘ.
With MU in rupees, this becomes MU of the last unit = its price.
Worth noting
TU is at its maximum only when the good is free; with a price, the consumer stops earlier.
- Concept
- One-good equilibrium condition
- Typical timeTypical
- 70 s
- Your timeYours
- —
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