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प्रश्न
A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X rises, the consumer buys less of good X. Use utility analysis.
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उत्तर
When a consumer buys both Goods X and Y, the consumer’s equilibrium condition is expressed through the equation:
`"MU"_x/P_x = "MU"_y/P_y = "MU"_m/P_n = MU_m`
Consider the following numerical example to understand the consumer’s equilibrium using marginal utility. A consumer’s Marginal Utility of Money (MUm) is 16 utils and two commodities x and y whose prices are Rs 1 (Px) and Rs 1 (Py) per unit, respectively. Consider the following schedule to analyse the marginal utility of commodity x (MUx) and commodity y (MUy).
| Units of x |
MU x (Utils) |
MU y3 (Utils) |
| 1 | 28 | 32 |
| 2 | 24 | 29 |
| 3 | 21 | 27 |
| 4 | 20 | 23 |
| 5 | 16 | 20 |
| 6 | 13 | 18 |
| 7 | 9 | 17 |
| 8 | 5 | 16 |
| 9 | 3 | 12 |
| 10 | 1 | 9 |
Based on the given schedule, the consumer is in equilibrium at the consumption of 5 units of commodity x and 8 units of commodity y. At such a consumption combination, the marginal utility of a rupee spent on commodity `x((MU_x)/P_x)` is equal to the marginal utility of a rupee spent on commodity y`((MU_y)/P_y)` and also equal to the marginal utility of money (`MU_m`).
If the price of commodity x rises, the ratio of marginal utility to the price of `X((MU_x)/P_x)` will be lesser than that of y
`"MU"_x/P_x < "MU"_y/P_y`
Here, the consumer reorganises his consumption combination to attain equilibrium.
Therefore, the consumption of commodity x decreases till it reaches equality.
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संबंधित प्रश्न
A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X falls, demand for good X rises. Use Utility Analysis.
Statement 1: A rational firm aims to operate in the second phase of the law of variable proportion.
Statement 2: In diminishing returns to a factor, i.e., the second phase of the law of variable proportion, MP falls.
______ states that as more and more units of a commodity are consumed, the marginal utility derived from the additional units must decline.
Total utility is ______ at the point of satiety.
Assertion (A): TU curve starts from the origin, increases at a decreasing rate, reaches a maximum, and then starts falling.
Reason (R): The rising MU curve shows the law of diminishing marginal utility.
Which of the following statement is false?
"The law states that a consumer will so allocate his expenditure so that the utility gained from the last rupee spent on each commodity is equal." Identify the law defined above.
When the marginal product becomes negative, then the total product starts ______
When is the consumer in equilibrium?
Identify the correctly matched pair of column A to that of Column B:
| Column A | Column B |
| (1) Marginal Utility | (a) The power or capacity of a commodity to satisfy human wants. |
| (2) Cardinal measure of utility | (b) The addition to total utility on consuming an additional unit of a commodity. |
| (3) Total Utility | (c) It is the sum total of utility derived from the consumption of all units of a commodity. |
| (4) Utility | (d) It is that measurement of utility, which is measured in terms of units. |
Which of the following are the correct assumptions for the utility approach?
The utility is a ______ concept.
The aggregate utility obtained from the consumption of a specific unit of a commodity is called ______.
If the total satisfaction from eating three bananas is 22 utils, this total is known as ______.
What does "marginal utility" mean?
According to the concept of utility, why does demand usually rise when price falls?
