In a situation where Mux represent the marginal utility of product X while Px represent the price respectively. Utility can be maximized when

Analyze the question

The question asks about the condition for utility maximization (consumer equilibrium), using the marginal utility of product X (MUx) and its price (Px).

Explain the concept

A rational consumer wants the greatest satisfaction from limited income. There are two common ways to state the equilibrium condition:

1. Cardinal utility, many goods: MUx/Px = MUy/Py = ... = MU of money (the marginal utility per naira is equal across all goods).
2. Single good, with utility measured in money terms: the consumer buys units until the extra satisfaction from the last unit equals what it costs, so MUx = Px.

Because the question mentions only product X and its price, it is testing the single-good version of the condition.

Solution

• Option A (MUx = MUa): compares the marginal utility of two different goods without considering prices. This does not guarantee maximum utility.
• Option B (MUx = Px): matches the condition for equilibrium. If MUx > Px, the consumer gains by buying more. If MUx < Px, the consumer is paying more than the satisfaction received and should buy less. Utility is maximized where they are equal.
• Option C (Px = X): meaningless, since it equates a price with a good.
• Option D (Px = Py): equal prices say nothing about satisfaction, so this is not a utility condition.

Answer: B. MUx = Px

Tip: In JAMB Economics, when you see "utility is maximized" or "consumer equilibrium," look for an option that links marginal utility to price (MU/P equal across goods, or MU = P for a single good). Options that only compare prices or only compare marginal utilities without price are usually wrong.