Ice cream sells for Rs. 20. Mohini who likes ice- cream has already consumed 4. Her Marginal utlility of one rupee is 4. Should she consumes more ice cream or stop consuming and Why?
A consumer strikes his equilibrium when,
It implies that at equilibrium, marginal utility derived from ice cream must be equal to 80.
So we can say that, if 4 units of ice cream yield satisfaction of 80 utils then she must stop consuming more. But if ​marginal utility derived from ice cream is greater than 80 then she should consume more ice creams to strike equilibrium.
It implies that at equilibrium, marginal utility derived from ice cream must be equal to 80.
So we can say that, if 4 units of ice cream yield satisfaction of 80 utils then she must stop consuming more. But if ​marginal utility derived from ice cream is greater than 80 then she should consume more ice creams to strike equilibrium.