Economy, asked by yashsvisinghooszfd2, 8 months ago

State the conditions of equilibrium in the case of two commodities. What will be the reaction of the consumer when MUx/Px is greater than MUy/Py?

Answers

Answered by Rishigaming

Answer:

The consumer is in equilibrium in respect of the purchases of goods 'x' and 'y' when: MUx = MUy Where MU is Marginal Utility and P equals Price Px Py. If MUx / Px and MUy / Py are not equal and MUx / Px is greater than MUy / Py, then the consumer willsubstitute good 'x' for good 'y'.

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