Consumer equilibrium exists when an individual
A)can be made better off by buying more of a normal good and less of an inferior good.
B)is receiving the same total utility from each of the goods he or she purchases.
C)is receiving the same marginal utility from each of the goods he or she purchases.
D)has the same MU\P ratio for each of the goods he or she purchases.

Question

Quizplus · Accepted Answer

Consumer equilibrium is reached when the marginal utility per dollar spent on each good is equal. Therefore, the consumer will keep adjusting their purchases until the MU\P ratio is the same for each good. A and B are incorrect because they do not involve the concept of marginal utility, and C is incorrect because the consumer may be receiving different levels of marginal utility from each good, as long as the marginal utility per dollar spent is equal.

Consumer Equilibrium Exists When an Individual