Question

4. What is meant by consumer's equilibrium. Given the following marginal utility schedule of a
commodity how many units of the commodity the consumer will purchase in his equilibrium
position given that marginal utility of a rupee for him is Rs. 7 ? Price of the commodity is equal to
in this case.
come to spend on two goods X
Rs. 2 per unit.
Units
Marginal utility
(utils)
Ho
1
20
2
18.
3
16
4
14
5
12
6.
10​

Answer 1

Answer:

The consumer equilibrium is found by comparing the marginal utility per dollar spent (the ratio of the marginal utility to the price of a good) for goods 1 and 2, subject to the constraint that the consumer does not exceed her budget of $5