Question

State whether true or false:

A consumer buys a combination of two goods: X and Y with marginal utilities equal to 30 utils and 35 utils respectively. Price of X is ₹ 6 per unit. The consumer will be in equilibrium only when price of Y is ₹ 7 per unit.

Answer 1

This statement is true.

Explanation:

A consumer is in equilibrium when:

\[ \frac{MU_X}{P_X}=\frac{MU_Y}{P_Y} \]

Substituting the given values:

\[ \frac{30}{6}=\frac{35}{P_Y} \]

\[ P_Y=\frac{35\times6}{30}=\text{₹}7 \]