Question

Given the price of goods and services, which of the following indicates consumer equilibrium?
1. The consumer spends his or her income in such a way that he or she attains the highest possible marginal utility
2. The consumer spends his or her income in such a way that the weighted marginal utility (marginal utility per rand) is the same for the goods
3. The consumer spends his or her income that he or she attains the lowest possible total utility
4. The consumer spends his or her income in such a way that the weighted marginal utility (marginal utility per rand) is at its lowest

Answer 1

Given the price of goods and services, consumer equilibrium is when the consumer spends his or her income in such a way that the weighted marginal utility (marginal utility per rand) is the same for the goods or MU1/P1 = MU2/P2.
So, the correct answer is 2.