A. Marginal utility of a commodity is equal to the price paid for it
B. Marginal utility of a commodity X is equal to the price of commodity Y
C. Average utility of a commodity is equal to the price paid for it
D. Total utility of a commodity is equal to the price paid for it
Correct Answer:
Option A – Marginal utility of a commodity is equal to the price paid for it
Explanation
MUx/Px = MUy/Py, where MUx is the marginal utility derived from good x, Px is the price of good x, MUy is the marginal utility of good y and Py is the price of good Y. A consumer should spend his limited money income on the goods which give him the most marginal utility per dollar. Only when the ratio of MU/P is equal for all goods is a consumer maximizing his total utility.
Veterinary medicine is the branch of medicine that deals with the prevention, diagnosis, and treatment…
Anthropology is the scientific study of human beings and their cultures. It encompasses a wide…
Sociology is the scientific study of human society, culture, and behavior. It examines the social…
Social Work is a profession dedicated to helping individuals, families, and communities to cope with…
Religious studies is an academic discipline that explores the beliefs, practices, and history of various…
Public administration is the field of study and practice that focuses on the organization and…