12th Class Economics Solved Paper - Economics 2016 Outside Delhi Set-III

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.

Answer:

Marginal utility of X = 3

Price of X = 2

Marginal utility of Y = 3

Price of Y= 1

\[MUx\div ~Px=3~\div 2=1.5\]

\[MUy~\div Py=3~\div 1=3\]

The ratio of Marginal utility to the price of good Y is more than the ratio of marginal utility to the price of good X. Hence, the consumer is not in an equilibrium and to reach equilibrium level, the consumer should increase the consumption of Y and decrease the consumption of X.

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12th Class Economics Solved Paper - Economics 2016 Outside Delhi Set-III

question_answer 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.

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.