Assertion (A): A consumer buying one good stops where the MU of the last unit, in rupees, equals its price.
Reason (R): Beyond that point, each extra unit would give less utility than the money paid for it.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true.
Because MU diminishes, an extra unit past that point is worth less than its price, which is why he stops: R explains A.

Concept: Why the consumer stops at MU = P
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEquilibrium with one good

Practise this chapter →

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Assertion (A): A consumer buying one good stops where the MU of the last unit, in rupees, equals its price.Reason (R): Beyond that point, each extra unit would give less utility than the money paid for it.

Explanation

Assertion (A): A consumer buying one good stops where the MU of the last unit, in rupees, equals its price.
Reason (R): Beyond that point, each extra unit would give less utility than the money paid for it.