Q7 of 50 Page 1

A consumer consumes only 2 goods X and Y. Marginal utilities of X and Y are 4 and 3 respectively. Price of X and price of Y is Rs 3 per unit.Is consumer in equilibrium. What will be the further reaction of the consumer ? Give reasons.

● No. the consumer is not in equilibrium.


● MUx/Px >MUy/Py


● 4/3 >3/3


● The per rupee MUx is greater than the per rupee MUy.


● He will buy more of good X and less of good Y, till MUx falls and MUy rises enough to make MUx/Px = MUy/ Py.


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