[amp_mcq option1=”$$\\frac{{{\\text{Value of X}}}}{{{\\text{Value of Y}}}} = \\frac{{{\\text{Value of Y}}}}{{{\\text{Value of Z}}}} = \\frac{{{\\text{Value of Z}}}}{{{\\text{Value of X}}}}$$” option2=”$$\\frac{{{\\text{MU of X}}}}{{{\\text{Value of X}}}} = \\frac{{{\\text{MU of Y}}}}{{{\\text{Value of Y}}}} = \\frac{{{\\text{MU of good Z}}}}{{{\\text{Value of Z}}}}$$” option3=”Value of X = Value of Y = Value of Z” option4=”MU of X = MU of Y = MU of Z” correct=”option2″]<\/p>\n
The correct answer is B.<\/p>\n
A consumer is in equilibrium when the marginal utility of each good is equal to the marginal utility of money. This means that the consumer is getting the same amount of satisfaction from each good, and is not willing to give up any more money for any of the goods.<\/p>\n
The marginal utility of a good is the additional satisfaction that a consumer gets from consuming one more unit of that good. The marginal utility of money is the additional satisfaction that a consumer gets from having one more unit of money.<\/p>\n
When a consumer is in equilibrium, the marginal utility of each good is equal to the marginal utility of money. This means that the consumer is getting the same amount of satisfaction from each good, and is not willing to give up any more money for any of the goods.<\/p>\n
In other words, the consumer is getting the most satisfaction possible from the goods that they are consuming.<\/p>\n
Option A is incorrect because it does not take into account the marginal utility of money. Option C is incorrect because it does not take into account the marginal utility of goods. Option D is incorrect because it does not take into account the marginal utility of money or goods.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”$$\\frac{{{\\text{Value of X}}}}{{{\\text{Value of Y}}}} = \\frac{{{\\text{Value of Y}}}}{{{\\text{Value of Z}}}} = \\frac{{{\\text{Value of Z}}}}{{{\\text{Value of X}}}}$$” option2=”$$\\frac{{{\\text{MU of X}}}}{{{\\text{Value of X}}}} = \\frac{{{\\text{MU of Y}}}}{{{\\text{Value of Y}}}} = \\frac{{{\\text{MU of good Z}}}}{{{\\text{Value of Z}}}}$$” option3=”Value of X = Value of Y = Value of Z” option4=”MU of X = MU of Y = … <\/p>\n