Question

The necessary condition under utility approach to attain consumer’s equilibrium in case of 2 commodities is ______.

Options

• `(MU_X)/P_X = (MU_Y)/P_Y`

• `MRS_X = P_X/P_Y`

• MU_X = P_X

• None of these

Answer 1

The necessary condition under utility approach to attain consumer’s equilibrium in case of 2 commodities is `\underline((MU_X)/P_X = (MU_Y)/P_Y)`.

Explanation:

Under the cardinal utility approach, equilibrium for two goods requires equal marginal utility per rupee spent. The MRS-price ratio condition applies to indifference curve analysis.