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| 1. |
A consumer in consumption of single commodity equates price of the commodity with total utility. |
| Answer» Solution :A consumer compares price (additional COST) with additional benefit (MARGINAL UTILITY) and not with Totally Utility (TU). TU is the total satisfactions obtained from consumption of all the UNITS of a commodity. As price is always related to ONE unit, it cannot be equated with TU. | |