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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 falls, demand for good X rises. Use Utility Analysis.
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उत्तर
Utility Analysis:
The consumer reaches equilibrium only if the following condition is satisfied
`"MU_x"/P_x = "MU"_Y/P_Y`
Give that the utility received from each additional unit of the money spent on both the goods should be equal. The marginal utility of the amount spent on good A is equal to the marginal utility of the amount spent on good B and also equal to the marginal utility of money.
`"MU"_X/P_X = "MU"_Y/P_Y = "MU"_m`
if the price of good B fall in relation to good A, the consumer will buy more of good B
`"MU"_Y/P_Y > "MU"_X/P_X = "MU"`
The consumption of good B will tend to increase till the equality is established between the marginal, utilities of both the goods become equal to the marginal utility of money.
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संबंधित प्रश्न
______ states that as 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.
Match the following items in Group A to that in Group B and choose the correctly matched pair.
| Group A | Group B |
| (1) Assumption of Law of diminishing marginal utility. | (a) Homogeneous units of commodity |
| (2) Assumption of Law of equimarginal utility | (b) Continuous consumption without any time lag. |
| (3) Assumption of Law of diminishing total utility. | (c) Standard units of commodity |
| (4) Assumptions of Law of diminishing utility | (d) No change in tastes, preferences, or income of the consumer. |
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.
Total utility is ______ at the point of satiety.
Which of the following statement is false?
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 ______.
How is utility measured in cardinal utility analysis?
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?
