WAEC Economics 2018 Paper

Concept: Consumer equilibrium occurs when marginal utility equals price.Explanation: A consumer maximizes satisfaction by adjusting consumption until the marginal utility ($MU$) of a good equals its price ($P$).If $MU > P$, the consumer gains more satisfaction from an extra unit than its cost, so they buy more.If $MU < P$, the consumer values the extra unit less than its cost, so they buy less.Therefore, when $MU = P$, the consumer has no reason to buy more or less.This condition ensures the consumer is in equilibrium with respect to that commodity.Answer: A. the consumer is in equilibrium.