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A consumer consumes only two goods …

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A consumer consumes only two goods x and y whose prices are 4 and 5 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of x edual to 5 and that of y equal to 4 , is the consumer in equilibrium? Give reason what will a rational comsumer do in this situation? Use utility analysis

Posted by Arshpreet Sandhu 7 years, 7 months ago

CBSE > Class 12 > Economics

1 answers

Deepesh J 7 years, 7 months ago

No,the consumer is not at equilibrium. As, MUx/PX>MUy/Py So to maximise his satisfaction of r to be at equilibrium a rational consumer will increase consumption of good x and decrease consumption of good y.

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