Question

State the equilibrium condition in terms of cardinal utility analysis in case of two commodities.

Answer 1

When a consumer is buying two different goods, they will be in equilibrium if their money is allocated in such a way that the marginal utility per rupee spent on each good is the same.
This means the consumer gets equal satisfaction from the last rupee spent on both goods.

Symbolically, the condition for equilibrium is:

`(Mu_X)/(P_X) = (Mu_X)/(P_y) = MU` per unit of money.