Question

marginal rate of substitution of X and Y it's higher than the ratio of prices.explain the reaction of the consumer in this situation.​

Answer 1

Answer:

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Explanation:

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Answer 2

Answer:

when Price Ratio (or Market Rate of Exchange) is higher than marginal Rate of Substitution, it means that to obtain one more unit of X, the consumer is willing to sacrifice less units of Y as compared to what is required in the market. It induces the consumer to buy less of X and more of Y.