The consumer equilibrium condition for two goods is achieved by equating the:
A) marginal utility of one to the price of the other for the last dollar spent on each good.
B) prices of both goods for the last dollar spent on each good.
C) marginal utilities of both goods for the last dollar spent on each good.
D) ratios of marginal utility to the price of both goods for the last dollar spent on each good.

Question

Quizplus · Accepted Answer

Consumer equilibrium is achieved when the ratio of the marginal utility to the price is equal for all goods, ensuring maximum utility for the budget spent.

The Consumer Equilibrium Condition for Two Goods Is Achieved by Equating