What happens if Mux/Px> MUy/Py? Explain
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Explanation:
If MUx/Px > MUy/Py then it means that satisfaction of the consumer derives from spending a rupee on Good X greater than the satisfaction derived from spending a rupee on Good Y.The consumer will reallocate his income by substituting Good X for Good y. As the consumption of Good X increases the marginal utility derived from it goes on diminishing and reverse proposition occurs for Good y this process will continue till MUx/Px becomes equal to MUy/Py.
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