In the theory of the consumer behavior, a consumer is said to maximize utility when

Analyze the question: It asks for the condition under which a consumer maximizes utility (reaches consumer equilibrium).

Concept: In the cardinal utility approach, a rational consumer spending limited income on a single commodity maximizes satisfaction by buying units until the extra satisfaction from the last unit (marginal utility) just equals the price paid.

• If MU > Price, the consumer gains by buying more.
• If MU < Price, the consumer is overspending and should buy less.
• At MU = Price, there is no further gain, so utility is maximized.

For several goods, this extends to the equimarginal principle:

MUₓ / Pₓ = MUᵧ / Pᵧ = ... = MUₙ / Pₙ

(With money's marginal utility treated as 1, this reduces to MU = P for each good.)

Checking the options:

• A. MU of a commodity = price paid for it. This is the standard equilibrium condition. ✔
• B. MU of X = price of Y. This mixes goods incorrectly. The correct comparison is the ratio MU/P across goods, not MUₓ with Pᵧ. ✘
• C. Average utility = price. Average utility plays no role in the equilibrium condition. ✘
• D. Total utility = price. Total utility is at its maximum when MU = 0, and it is not compared to price. ✘

Tip: Remember "MU meets Price." When you see "consumer equilibrium," think MU = P for one good, or MU/P equal across goods. Total and average utility are usually distractors.