+2 votes
in Class 12 by kratos

Given price of a good, how does a consumer decide as to how much of that good to buy?

1 Answer

+2 votes
by kratos
 
Best answer

Consumer purchases up to the point where marginal utility is equal to the price (MU=P). So long as marginal utility is greater than price, he keeps on purchasing. As he makes purchases MU falls and at a particular quantity of the good MU becomes equal to price. Consumer purchases up to this point.

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