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A consumer consumes only two goods …

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A consumer consumes only two goods X&Y . Marginal utilities of X&Y are 2 and 4 resp. Prices of XAnd Y are rs 4 per unit . Is consumer in equilibrium ? What will be further reaction of the consumer ? Give reasons

Posted by Arun Sharma 7 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Runjhun Sharma 7 years, 11 months ago

No consumer is not in equilibrium because mux/px is less than muy/py. Now the consumer will consume more units of good y in place of x as it offers him greater satisfaction.as consumption of y increase mu of y will decrease and mu of x will rise due to less consumption . Thus the consumer reaches once again in equilibrium when mux/px= muy/py.

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