Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

The following is the schedule representing the marginal utilities obtained by a consumer  from consuming good X and marginal utility of a rupee is 2. State the number of units being consumed by him at a prices of ₹6 to obtain his equilibrium

Unit Consumed 1 2 3 4 5
$MU_X$ (in units) 16 14 12 10 6
Options:

4 units

3 units

2 units

5 units

Correct Answer:

3 units

Explanation:

The correct answer is option (2) : 3 units

Given marginal utility of a Rupee = 2

A consumer will be in equilibrium when MU (₹) = Price (₹)

We have to find equilibrium when P =6

Thus, the units at which the marginal utility in rupees = 6, this will be the equilibrium.

Unit Consumed 1 2 3 4 5
$MU_X$ (in units) 16 14 12 10 6
MU (in rupee) -MU (util)/MU of a rupee (i.e. 2) 8 7 6 5 3

The MU in rupee is equal to 6 at 3 units. This is the point of consumer equilibrium.