Let MU_a and MU_b stand for the marginal utilities of apples and bagels. Let P_a and P_b stand for their prices. The general necessary condition for consumer equilibrium is A) MU_a = MU_b. B) MU_a = MU_b and P_a = P_b. C) MU_a/P_a = MU_b/P_b. D) MU_a/MU_b = P_b/P_a.

Question

Quizplus · Accepted Answer

The necessary condition for consumer equilibrium is that the marginal utility per dollar spent on each good should be equal. This is expressed as MUa/Pa = Mub/Pb.

Let MUa and MUb Stand for the Marginal Utilities of Apples

Let MU_a and MU_b Stand for the Marginal Utilities of Apples