Q.28. If price X is 5 and price of Y is 8 find consumers equilibrium if income is 102 and MUm is 10 utils. Units consumed MUX MUY 1 2 3 4 5 6 7 8 9 10 11 120 110 90 85 75 60 45 30 10 0 - 12 200 190 170 148 131 119 110 95 90 78 70
Answers
Answer:
Consumer attains equilibrium when:
P
x
MU
x
=MU of Money
or, when MU
x
=P
x
. MU of Money,
Substuting the given values, the consumer attains equlibrium when:
MU
x
=6×1=6.
Implying that the equilibrium is attained when 48 units of the commodity are purchased. (The table show that when MU
X
=6,4) units are purchased )
Therefore, the consumer should purchase 4 units in order maximum satisfaction
Explanation:
Budget line is a graphical representation which shows all the possible combinations of the two goods that a consumer can buy with the given income and prices of commodities. It is also called consumption possibility line.
Answer:
Consumer attains equilibrium when:
P
x
MU
x
=MU of Money
or, when MU
x
=P
x
. MU of Money,
Substuting the given values, the consumer attains equlibrium when:
MU
x
=6×1=6.
Implying that the equilibrium is attained when 4 units of the commodity are purchased. (The table show that when MU
X
=6,4) units are purchased )
Therefore, the consumer should purchase 4 units in order maximum satisfaction.