Question

explain the condition determining how many unit of good the consumer will buy at a given price

Answer 1

The consumer will buy upto such units of a good at which he will obtain maximum satisfaction, i.e. he will go on buying till equilibrium is struck. 

Consumer's Equilibrium is attained when: 
MUx (in utils) ÷ MUm = Px

Answer 2

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Total utility refers to total satisfaction that a consumer derives from consumption of certain units of a commodity

Marginal utility refers to the additional satisfaction which a consumer derives from consumption of an additional unit of a commodity.

Both TU and MU are related in following ways:

1. As long as MU is positive, TU increases but at declining rate.

2. When MU=0, than TU is maximum

3. When MU becomes negative, TU declines.

It means a consumer will be at highest point of satisfaction when MU derived from that commodity becomes 0.

For example:

Units of commodity X 0 1 2 3 4 5 6

Total Utility 0 10 18 23 26 26 24

Marginal Utility 0 10 8 5 3 0 (-2)

In above case, consumer will buy 5 units of commodity X, as here TU is maximum and MU is zero. beyond this TU will fall. Therefore, by buying 5 units of commodity X, consumer will get maximum utility.