If the marginal utilities from two goods are not equal,then the consumer
A)cannot be in equilibrium.
B)should increase consumption of the good with the lower marginal utility.
C)should decrease consumption of the good with the lower marginal utility.
D)may possibly be in equilibrium.
E)will definitely be in equilibrium.

Question

Quizplus · Accepted Answer

It is possible for a consumer to be in equilibrium with marginal utilities from two goods that are not equal. The consumer is in equilibrium when the ratio of the marginal utility to price of one good equals the ratio of the marginal utility to price of the other good. However, if the marginal utility from one good is much higher than the other, the consumer may choose to consume more of the good with the higher marginal utility. But this does not necessarily mean they are not in equilibrium.

If the Marginal Utilities from Two Goods Are Not Equal,then