Q. 15.0( 2 Votes )

A consumer consumes only two goods X and Y and is in equilibrium. Explain the reaction of the consumer through utility analysis.

Answer :

Let the Marginal utility for good X = MUx

Marginal utility for good Y = MUy

Price of good X = Px

Price of good Y = Py

According to Utility analysis, consumer is in equilibrium when

Where, MUm = Marginal Utility of money

Now, Px falls,

And when Py falls,

Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Related Videos
Introduction to BiotechnologyFREE Class
Introduction to Solutions50 mins
General introduction of Amines54 mins
Introduction to p Block Elements49 mins
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
view all courses