Question

let MUx=20, Px=4, MUy=25, Py=5. Is the consumer in a state of equilibrium, if MUm=5​

Answer 1

The condition for being in Equilibrium situation in 2 commodity case is :-

$\sf{\boxed{\red{\implies \dfrac{MU_x}{P_x} = \dfrac{MU_y}{P_y} = MU_m }}}$

⇒Here MUx is marginal utility per rupee spent on good x

⇒MUy is marginal utility per rupee spent on good y

⇒MUm is the marginal utility of money  

According to the question :-

• MUx = 20
• Px = 4
• MUy = 25
• Py = 5
• MUm = 5

Using the above mentioned formula

$\sf{\implies \dfrac{20}{4} = \dfrac{25}{5} = 5 }$

$\sf{\implies \dfrac{\not{20}\ 5 }{\not4\ 1} = \dfrac{\not{25}\ 5}{\not5\ 5} = 5 }$

$\sf{\implies 5 = 5 = 5 }$

The above mentioned condition is satisfied .

It means that the consumer is in equilibrium position .