Economics · Equi-Marginal Principle
Under the cardinal utility framework, which of the following accurately describes the fundamental condition for achieving consumer equilibrium based on the Equi-Marginal Principle?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The total utility derived from a good remains completely independent of the consumption of other goods.
- 2The consumer allocates their entire budget to a single good due to an increasing marginal rate of substitution.
- 3The marginal rate of substitution between two goods equals the ratio of their respective market prices.
- 4The marginal utility per unit of money spent is equalized across all consumed goods.✓
Correct answer
The marginal utility per unit of money spent is equalized across all consumed goods.
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