Question

a consumer consume 2 goods X and Y both prices at per unit and his MRS is equal to he will in a state of equilibrium reason?​

Answer 1

According to the utility approach, a consumer reaches equilibrium where the following equality is met.  

P  

x

​  

 

MU  

x

​  

 

​  

=  

P  

y

​  

 

MU  

y

​  

 

​  

 

According to the given question  

P  

x

​  

 

MU  

z

​  

 

​  

=  

2

4

​  

 

P  

y

​  

 

MU  

y

​  

 

​  

=  

1

1

​  

 

So,  

P  

y

​  

 

MU  

y

​  

 

​  

 is greater than  

P  

x

​  

 

MU  

x

​  

 

​  

. Thus, to reach the equilibrium, a rational consumer would increase the  

P  

x

​  

 

P  

y

​  

 

​  

 of good x.