Question

Archit consumes two commodities X and Y whose prices are Rs.9 and Rs.12 per unit respectively. Does he strike his equilibrium when he is getting marginal utility from X equal to 18 and that from Y also equal to 18?

Answer 1

Answer:

We know that, Mr.X strikes his equilibrium when:

P

A

MU

A

=

P

B

MU

B

P

A

MU

A

=

6

7

and

P

B

MU

B

=

8

7

Here,

6

7

>

8

7

or

P

A

MU

A



=

P

B

MU

B

.

Therefore, Mr. X does not strike his equlibrium.

Explanation:

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