suppose the mu of good x is 20 its price is rs 4 and the mu good y is 50 and isprice rs5 .this perticular individual is spending rs 20 on eachgood .is she maximizing satisfaction
Answers
Answered by
0
According to law of equi-marginal utility,
the condition for consumer equilibrium is:
MUx/ Px= MUy/ Py = MU per unit of money
20/ 4 = 50/5 = 40(₹20 on each good) is the equilibrium condition.
since 20/4≠50/5≠40, therefore the consumer is not maximizing satisfaction from consumption of these two commodities.
Similar questions