Economics (AS & A Level) · May / June 2022 · Paper 31 · Question 4
9708Utility
What is the central principle of marginal utility theory?
- AAs more is consumed of a normal good, the additional satisfaction gained increases.
- BConsumers are in equilibrium when the marginal utility gained from good X equals the price of good Y.
- CConsumers are in equilibrium when the ratio of the marginal utility of goods X and Y are equal to the ratio of their prices.
- DConsumers are in equilibrium when the total utility gained from good X is the same as gained from good Y.
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Correct answer: C. Consumers are in equilibrium when the ratio of the marginal utility of goods X and Y are equal to the ratio of their prices.
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