Arrange the following stages of Consumer's Equilibrium in the correct sequence under the utility analysis

(A) Marginal Utility becomes equal to the price of a commodity
(B) Marginal utility, derived from a commodity X is greater than Px
(C) Increase the consumption of commodity X
(D) The consumer reallocates expenditure to maximize satisfaction.

Choose the correct answer from the options given below:

(B), (D), (C), (A)

The correct answer is Option (2) → (B), (D), (C), (A)

To understand the stages of Consumer's Equilibrium under utility analysis, let's consider a rational consumer who aims to maximize their satisfaction (utility) given their limited income and the prices of commodities. Equilibrium is achieved when the consumer cannot increase their total utility by reallocating their spending.

Correct sequence of events:

1. (B) Marginal utility, derived from a commodity X is greater than Px: This is a state of disequilibrium. It means that the additional satisfaction (marginal utility) the consumer gets from consuming one more unit of commodity X is greater than the price they have to pay for it (Px). In other words, the consumer is getting more "bang for their buck" from commodity X than from other alternatives or from holding onto their money.

2. (D) The consumer reallocates expenditure to maximize satisfaction: Upon realizing the situation in (B), a rational consumer will decide to adjust their spending pattern. Their goal is always to maximize total satisfaction, and this involves strategically reallocating their budget towards commodities that offer relatively higher marginal utility per unit of currency.

3. (C) increase the consumption of commodity X: As part of the reallocation strategy, since commodity X is providing more utility per rupee, the consumer will increase their consumption of commodity X. This is the specific action taken to move towards equilibrium.

4. (A) Marginal Utility becomes equal to the price of a commodity: As the consumer increases the consumption of commodity X, the Law of Diminishing Marginal Utility comes into play. This law states that as more units of a commodity are consumed, the additional satisfaction derived from each successive unit tends to decrease. The consumer will continue to increase consumption of X until the marginal utility (MUx) derived from it falls and becomes equal to its price (Px). At this point, the consumer has maximized their utility from that commodity, and they are in equilibrium with respect to commodity X.