Question

If MUx = 30, Px = 5 MUy = 40 the value of Py will be? ​

Answer 1

Answer :-

The equilibrium condition for two goods case is :-

• $\sf \dfrac{Mux}{Px}= \dfrac{Muy}{Py}$

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Here,

• Mux = Marginal utility of good x
• Muy = Marginal utility of good y
• Px = Price of good x
• Py = Price of good y

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$\: \implies \: \sf \dfrac{Mux}{Px}= \dfrac{Muy}{Py}$

$\: \implies \: \sf \dfrac{30}{5}= \dfrac{40}{Py}$

$\: \implies \: \sf \cancel\dfrac{30}{5}= \dfrac{40}{Py}$

$\: \implies \: \sf 6= \dfrac{40}{Py}$

$\: \implies \: \sf Py = \dfrac{40}{6}$

$\: \implies \: \sf Py = \cancel \dfrac{40}{6}$

$\: \implies \: \sf Py =6.66$

Hence price of good y will be Rs. 6.66.