Multiple choice

The law of Equi-Marginal Utility states

  1. MUx/Px > MUy/Py > MUz/Pz

  2. MUx/Px = MUy/Py = MUz/Pz

  3. MUx/Px < MUy/Py < MUz/Pz

  4. MUx.Px = MUy.Py = MUz.Pz

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The law of Equi-Marginal Utility states that a consumer maximizes satisfaction when the marginal utility per rupee spent is equal across all goods consumed. Mathematically, this means MUx/Px = MUy/Py = MUz/Pz. At this point, the consumer cannot increase total utility by reallocating expenditure.