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Question
State the conditions of consumer’s equilibrium in case of two commodities.
Very Short Answer
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Solution
Consumer's Equilibrium in case of two commodities is determined when: (i) The ratio of Marginal Utility to Price is same in case of both the goods, i.e. `(MU_X)/P_X = (MU_Y)/P_Y or (MU_X)/(MU_Y) = P_X/P_Y`; and (ii) MU falls as consumption increases.
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