a consumer consumes only two goods X and y and is in equilibrium. price of good y rises. show that it will lead to to fall in demand for good Y
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The consumer is in equilibrium when MUx / Px=MUy / Py. Given that Px falls, therefore, MUx /Px >MUy /Py. ... Accordingly, the consumer will start buying more of X commodity in place of Y commodity. When consumption of X increase, MUx must fall, while a cut in consumption of Y would mean a rise in MUy
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