Share

# A Consumer Consumes Only Two Goods X and Y. the Marginal Utilities of X and of Y is 3. Prices of X and Y Are Rs 2 and Rs 1 Respectively. is Consumer in Equilibrium? What Will Be Further Reaction of the Consumer? - CBSE (Arts) Class 12 - Economics

ConceptConditions of Consumer's Equilibrium Using Marginal Utility Analysis

#### Question

A consumer consumes only two goods X and Y. The marginal utilities of X and of Y is 3. Prices of X and Y are Rs 2 and Rs 1 respectively. Is consumer in equilibrium? What will be further reaction of the consumer?

Give reasons.

#### Solution

(MU_x)/P_x=(Mu_y)/P_y

As we know that

(MU_x)/P_x=3/2=1.5

(MU_y)/P_y=3/1=3

Here,

(MU_y)/P_y>(MU_x)/P_x

Thus, if a consumer is not in equilibrium, then the consumer increases the consumption of Good Y and decreases that of Good X to reach the equilibrium.

Is there an error in this question or solution?

#### APPEARS IN

Solution A Consumer Consumes Only Two Goods X and Y. the Marginal Utilities of X and of Y is 3. Prices of X and Y Are Rs 2 and Rs 1 Respectively. is Consumer in Equilibrium? What Will Be Further Reaction of the Consumer? Concept: Conditions of Consumer's Equilibrium Using Marginal Utility Analysis.
S