What would be the consumers reaction when mux is 10 and muy is 15 and the price of commodity x and y are rs 2 and rs 3 respectively
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The law of equi-marginal utility states that the consumer will distribute his money income between the goods in such a way that the utility derived from the last rupee spent on each good is equal.
The equilibrium condition is satisfied when the consumer consumes the goods in the combination of 1 unit of Good X and 4 units of Good Y. At this level of consumption, the total expenditure of the consumer is :(1 × ` 2) + (4 × ` 1) = 2 + 4 = 6This is attainable also in his given income of Rs 12.
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