In the case of a free good, the consumer will be in equilibrium when:
A)MU = P
B)MU = 0
C)TU = 0
D)TU =1

Question

Quizplus · Accepted Answer

In the case of a free good, the consumer will be in equilibrium when the marginal utility (MU) becomes zero. This is because, as the consumer continues to consume more of the free good, the additional satisfaction (marginal utility) from consuming one more unit of the good decreases until it reaches zero. At this point, the consumer has maximized their utility from the good and is in equilibrium.

In the Case of a Free Good, the Consumer Will