a consumer consumes only two goods X and Y marginal utility of x and y are 16 and 5 respectively the prices of X and Y is rupees 7 per unit and rupees 19 per unit respectively is the customer in equilibrium what will be the for the reaction of the customer explain
Answers
Answered by
0
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.
Try doing similar steps and you will find your answer .
Cause I don't want to support your laziness . so , I am giving similar one.
Similar questions