Question

A situation where Px/Py >MUx/Muy is better than Px/Py = MUx /Muy. Give reason whether this statement is true or false.​

Answer 1

False ,

Reason ==>

Consumer should buy more of commodity X in place of commodity y . only then the equality between commodity X and commodity y can be restored, and the equilibrium is attained.

Answer 2

hey mate...

here is your answer...

False

MRS> PX/PY

→MUx/ MUy> PX/py

→ MUx/ PX> MUy/ Py (after some simple arrangement)

It means that marginal utility from the consumption of x exceeds that from y. A rational consumer would obviously decide to consume more x at the expense of y. As the consumer goes on spending more resources on x, (due to the law of diminishing marginal utility) the MU from x falls continuously & MU from y increases. This process continues until & unless equality between MRS & price ratios is ensured.

hope it helps...