Question

A consumer consumes only two goods X and Y and is in equilibrium.,price of X falls..Explain the reaction of the consumer through utility analysis.??

Answer 1

when there is a fall in price of commodity X, consumers will be willing to buy the product more.Eg: if the product was 50rs for 1kg the consumer would be willing to buy only 1 or 2 kg's.If that there's a fall in its price about 25rs the consumer will be willing to buy about 7-8kg's more than that he was purchasing before