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Question
What is the equilibrium condition for consumer utility with two goods, X and Y?
Options
MUX = MUY
PX = PY
MUX + PX = MUY + PY
MUX / PX = MUY / PY
MCQ
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Solution
MUX / PX = MUY / PY
Explanation:
The equilibrium is reached when the marginal utility per rupee is equal for both goods.
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