WAEC Economics 2012 Objective — Question 5
Question 5 of 49 from the West African Examinations Council (WAEC) Economics 2012 Objective paper, with the correct answer and a full explanation.
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A condition for consumer utility maximization is
- A. equality of the ratio of marginal utilities and the ratio of pricesCorrect
- B. equality of the ratio of average utilities and the ratio of prices
- C. equality of the marginal utility to total utility ratio for both commodities
- D. total utility and marginal utility must be zero
Explanation
The condition for consumer's equilibrium is the equality of ratio of marginal utility of x and y to price of x and y: Mux/Px = Muy/Py.
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