If the marginal utility of the last unit commodity \(\mathrm{X}\) at \(\mathrm{N} 2\) is 16 and that of commodity \(\mathrm{Y}\) at \(\mathrm{N} 4\) is 24 , the consumer will be at equilibrium when ____________
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Correct Answer: Option C
Explanation:
The condition for utility maximization is $$
\frac{M U_{1}}{P_{1}}=\frac{M U_{1}}{P_{1}}
$$
If they are not equal, the consumer is not at equilibrium. Given the marginal utility and the price of \(x\) and \(y\) \(=\frac{16}{2}>\frac{24}{4}\)
Therefore, the consumer should consume more of \(x\) to make the MU of \(x\) fall.
The condition for utility maximization is $$
\frac{M U_{1}}{P_{1}}=\frac{M U_{1}}{P_{1}}
$$
If they are not equal, the consumer is not at equilibrium. Given the marginal utility and the price of \(x\) and \(y\) \(=\frac{16}{2}>\frac{24}{4}\)
Therefore, the consumer should consume more of \(x\) to make the MU of \(x\) fall.