Which of the following statements is true when the consumer is in utility-maximizing equilibrium?
A)The number of units of each good purchased is equal.
B)The prices of the goods in question must be equal.
C)The total benefits the consumer receives from every good consumed must be the same for all goods.
D)The rate at which the consumer is willing to trade one good for another is equal to the ratio of their market prices.

Question

Quizplus · Accepted Answer

When the consumer is in utility-maximizing equilibrium, the consumer has allocated their income in such a way that the ratio of the marginal utility of one good to the price of that good is equal to the ratio of the marginal utility of the other good to the price of that good. This is known as the marginal rate of substitution (MRS). The consumer will continue to adjust their consumption until the MRS equals the ratio of the market prices of the goods. Therefore, the rate at which the consumer is willing to trade one good for another is equal to the ratio of their market prices.

Which of the Following Statements Is True When the Consumer