A consumer consumes
only two goods P and Q. He
plans to spend his whole of
income on these goods. He
observed that MU (n) = 6 units
and MU (Q) = 4 units and Price
(P) and Price (Q) are 4 and 6
per unit respectively. Inkhis
situation, consumer while
(a) Buy more pf O good
b ) Bpy less of P good
(C) No change in his original plan
(d) Buy more of P and less of
good
Answers
Answered by
8
Answer:
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
x
=
4
5
=1.25
P
y
MU
y
=
5
4
=0.8
Since,
P
x
MU
x
is greater that
P
y
MU
y
.
Thus, the consumer is not in equilibrium. In order to reach the equilibrium, a rational consumer would increase the consumption of good X and decrease that of good Y.
Explanation:
Answered by
4
Answer:
hellooo
Explanation:
same as above mate..
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