At consumer equilibrium income is allocated to purchases so that the ratio of marginal utility to price is equal for different goods.

Question

Quizplus · Accepted Answer

At consumer equilibrium, the consumer allocates their income in a way that the marginal utility derived from the last unit of each good consumed is proportionate to its price. This means that the MU/price ratio is equal for all goods. Hence, option A is true.

At Consumer Equilibrium Income Is Allocated to Purchases So That