Question

What change does it make to the equation of consumer equilibrium's when he decided to spend his income on two commodity rather than one?? ​

Answer 1

$\sf{\underline{Equilibrium \:conditions}:-}$

$\sf{For \: one \: commodity: P_{x} = MU_{x}}$

This means that, the price of the commodity should be equal to the Marginal Utility of the commodity at particular unit.

$\sf {For \: two \: commodities: \frac{P_{x}}{P_{y}} = \frac{MU_{x}}{MU_{y}} }$

This means that, the ratio of the prices of the commodities should be equal to the ratio of the Marginal Utlities of the commodities at a particular unit.