Question

3. When the price of onions is very high, the poor man simply stops buying it. Explain the economics
of it, using utility analysis.
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Answer 1

Answer:

Ans. A consumer buys a commodity only when a rupee spent on it gives rupee worth of satisfaction (MUm). A poor man stops the consumption of onion when he finds that a rupee spent on it does not give rupee worth of satisfaction (no matter what quantity of onions is purchased), so that, MUx / Px < MUm.

Answer 2

law of demand is a economical system which derives that increase in price makes the demand decrease as long as when the price of onion will increase the demand is always decrease and potato is also not necessary product like salt and water etc... so a poor man can satisfy with another product.

Explanation:

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