A consumer is in equilibrium when

Analyze the question: It asks for the definition of consumer equilibrium in economics.

Explain the concept: A consumer has a limited income and wants to get the most satisfaction (utility) from it. Consumer equilibrium is reached when the consumer allocates income among goods so that total utility is at its maximum and there is no incentive to reallocate spending.

Under the utility approach, this happens when the marginal utility per naira is equal across all goods:

MU₁/P₁ = MU₂/P₂ = ... = MUₙ/Pₙ

For a single good, the condition is MU = Price.

Evaluate the options:

• A. Market supply equals market demand: This describes market equilibrium, not an individual consumer's equilibrium. ❌
• B. He maximizes his satisfaction from spending his income: This is the correct definition of consumer equilibrium. ✅
• C. The market is also in equilibrium: Consumer equilibrium does not depend on the market being in equilibrium. ❌
• D. He has consumed all he wants: This describes satiation, where marginal utility is zero. A consumer is constrained by income, so this is not the condition. ❌

Exam tip: Look at the keyword in the question. "Consumer equilibrium" means maximum satisfaction given a limited income. "Market equilibrium" means demand = supply. WASSCE often tests the difference between the two, so don't mix them up.