[amp_mcq option1=”$$M{U_X} = M{U_y} = {M_Z}$$” option2=”$$\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{{M_Z}}}{{{P_Z}}}$$” option3=”$$\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{M{U_Z}}}{{{P_Z}}} = M{U_M}$$” option4=”$$\\frac{{M{U_X}}}{{{P_X}}} < \\frac{{M{U_Y}}}{{{P_Y}}} < \\frac{{M{U_Z}}}{{{P_Z}}} < M{U_M}$$\" correct=\"option1\"]<\/p>\n
The correct answer is $\\boxed{\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{M{U_Z}}}{{{P_Z}}}}$.<\/p>\n
The consumer is said to be in equilibrium when he plans his expenditure on x, y and z commodities in such a way that he ultimately attains the highest possible level of satisfaction, given his income and the prices of the commodities. This is achieved when the marginal utility per unit of money spent on each commodity is the same. In mathematical terms, this is expressed as $\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{M{U_Z}}}{{{P_Z}}}$.<\/p>\n
Option A is incorrect because it does not take into account the prices of the commodities. Option B is incorrect because it does not take into account the marginal utility of the commodities. Option C is incorrect because it does not take into account the consumer’s income. Option D is incorrect because it does not represent a situation of equilibrium.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”$$M{U_X} = M{U_y} = {M_Z}$$” option2=”$$\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{{M_Z}}}{{{P_Z}}}$$” option3=”$$\\frac{{M{U_X}}}{{{P_X}}} = \\frac{{M{U_Y}}}{{{P_Y}}} = \\frac{{M{U_Z}}}{{{P_Z}}} = M{U_M}$$” option4=”$$\\frac{{M{U_X}}}{{{P_X}}} < \\frac{{M{U_Y}}}{{{P_Y}}} < \\frac{{M{U_Z}}}{{{P_Z}}} < M{U_M}$$\" correct=\"option1\"]\n<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-55865","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n