Consumer Satisfaction and the Equilibrium of Total Utility and Price of Commodity

Consumer satisfaction is maximized when the equilibrium is reached between the price of a commodity and its total utility. Let's understand this concept in detail.

1. Total Utility
Total utility refers to the total satisfaction or benefit that a consumer derives from consuming a given quantity of a commodity. As a consumer consumes more units of a commodity, the total utility generally increases but at a diminishing rate. This means that each additional unit of the commodity adds less to the total utility than the previous unit.

2. Marginal Utility
Marginal utility refers to the additional utility or satisfaction that a consumer derives from consuming one additional unit of a commodity. It is the change in total utility resulting from consuming an extra unit of the commodity.

3. Equilibrium of Total Utility and Price of Commodity
The equilibrium of total utility and price of a commodity is achieved when the consumer gets maximum satisfaction. This equilibrium occurs when the consumer allocates their budget in such a way that the marginal utility of the last unit of money spent on each commodity is equal.

- When the consumer spends their money on different commodities, they compare the marginal utility derived from each commodity with its price.
- The consumer continues to allocate their budget until the marginal utility per unit of money spent is equal for all commodities.
- At this equilibrium, the consumer is getting maximum satisfaction because they have allocated their resources in a way that the additional utility gained from the last unit of money spent on each commodity is the same.

4. Explanation of the Correct Answer
The correct answer to the question is option 'C' because the equilibrium of consumer satisfaction is achieved when the price of a commodity and the total utility are the same. This means that the consumer is willing to pay the price of a commodity that is equal to the total utility they derive from consuming it.

- If the total utility is higher than the price of a commodity, the consumer perceives that they are getting more satisfaction than what they are paying for.
- If the total utility is lower than the price of a commodity, the consumer perceives that the satisfaction they derive from consuming the commodity is not worth the price they are paying.

Therefore, the equilibrium of consumer satisfaction is reached when the price of a commodity and the total utility are the same, ensuring that the consumer gets maximum satisfaction from their consumption choices.