Let price of a commodity X be Rs 10. Marginal utility (in terms of money) for 5units is given as
Units | 1 | 2 | 3 | 4 | 5 |
Mux (Rs) | 16 | 10 | 4 | 2 | 1 |
How many units should a consumer purchase, so that his satisfaction is maximum?
A consumer attains maximum satisfaction when
Here, as the price of the commodity is given as Rs 10, so the equality given above is satisfied at 2 units of commodity where is given as 10. Thus, consumer attains maximum satisfaction by consuming two units of the commodity.