If the marginal utility of commodity is equal to its price, then

Analyze the question: It asks what it means when the marginal utility (MU) of a commodity equals its price (P). This is about consumer equilibrium in the theory of consumer behaviour.

Explain the concept: A rational consumer wants to maximize satisfaction from limited income. The consumer compares the extra satisfaction from one more unit (MU) with the price paid for it (P, which measures the money sacrificed).

• If MU > P: buying more adds more satisfaction than it costs, so the consumer should buy more.
• If MU < P: the consumer is paying more than the benefit received, so should buy less.
• If MU = P: no change in consumption can increase satisfaction, so the consumer is in equilibrium.

For a single commodity, the equilibrium condition is MU = P (more precisely, MU of the commodity = price × marginal utility of money, with the MU of money taken as 1). For several goods, it extends to MUa/Pa = MUb/Pb = ...

Step-by-step check of the options:

• A. The consumer is in equilibrium: Correct. At MU = P, satisfaction is maximized, so there is no incentive to change the quantity bought.
• B. More of the commodity can be consumed: This applies when MU > P. At MU = P, buying more would push MU below P, which reduces net satisfaction.
• C. Total utility is also equal to its price: There is no such relationship. Total utility is the sum of all marginal utilities, not equal to price.
• D. The market is not in equilibrium: Market equilibrium concerns demand and supply (Qd = Qs), not MU and price. This option mixes up the concepts.

Answer: A: the consumer is in equilibrium.

Exam tip: Remember "MU = P means stop, you're at the top." If MU > P, buy more. If MU < P, buy less. Also keep consumer equilibrium (MU = P) separate from market equilibrium (demand = supply), since JAMB often tests that distinction.