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

Step 1: Analyze the question The question 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.

Step 2: The concept A rational consumer wants to maximise satisfaction from limited income. For a single commodity, the consumer reaches equilibrium when:

MU = P

(In terms of money, MU is measured by what the consumer is willing to pay for the extra unit.)

For several commodities, the condition becomes:

MUₐ/Pₐ = MUᵦ/Pᵦ = ... = MU of money

Step 3: Check each option

• A. The market is not in equilibrium: Wrong. This concerns the market, not the individual consumer, and it does not follow from MU = P.
• B. More of the commodity can be consumed: Wrong. If MU > P, the consumer should buy more. When MU = P, there is no further gain from buying more.
• C. Total utility is also equal to its price: Wrong. Total utility is the sum of all marginal utilities. It is not equal to price at equilibrium.
• D. The consumer is in equilibrium: Correct. At MU = P, the consumer gets maximum satisfaction. Buying more would make MU < P, which is a loss, and buying less would make MU > P, which is a missed gain.

Step 4: Answer The correct option is D.

Exam tip: Remember "MU = P means the consumer is settled." If MU > P, buy more. If MU < P, buy less. If MU = P, the consumer is in equilibrium.