Question

The price of Good X is ₹ 5 and the consumer has consumed 6 units. The marginal utility of the 6th unit is 15 utils. If the marginal utility of money
is 4, then is the
consumers in equilibrium ? Explain​

Answer 1

Explanation:

A Rule for maximizing Utility

If a consumer wants to maximize total utility, for every dollar that they spend, they should spend it on the item which yields the greatest marginal utility per dollar of expenditure.Average Utility is that utility in which the total unit of consumption of goods is divided by number of Total Units. The Quotient is known as Average Utility.Marginal utility quantifies the added satisfaction a consumer garners from consuming additional units of goods or services. The concept of marginal utility is used by economists to determine how much of an item consumers are willing to purchase.To calculate the marginal utility of something, just divide the change in total utility by the change in the number of goods consumed. In other words, divide the difference in total utility by the difference in units to find marginal utilityTo find total utility economists use the following basic total utility formula: TU = U1 + MU2 + MU3 … The total utility is equal to the sum of utils gained from each unit of consumption. In the equation, each unit of consumption is expected to have slightly less utility as more units are consumed.