Consumer Behavior

In microeconomics, a consumer reaches equilibrium when the marginal utility per unit of the good (MUm) is equal to the price of the good. The formula for marginal utility is: where is total utility and is quantity. Let’s calculate the marginal utility for each quantity consumed:
- For the 1st unit:
- For the 2nd unit:
- For the 3rd unit:
- For the 4th unit:
The price per unit is ₹4, and the equilibrium condition is . From the calculations, the marginal utility for the 4th unit is 5, which matches the equilibrium condition. Thus, the consumer stops purchasing at 4 units.