A consumer consumes only two Goods X and Y. The Marginal Rate of Substitution is 2. Prices per unit of X and Y are Rs. 5 and Rs.4 respectively.

Question

A consumer consumes only two Goods X and Y. The Marginal Rate of Substitution is 2. Prices per unit of X and Y are Rs. 5 and Rs.4 respectively.

A consumer consumes only two Goods X and Y. The Marginal Rate of Substitution is 2. Prices per unit of X and Y are Rs. 5 and Rs.4 respectively. Is consumer in equilibrium ? What will be the further reaction of the consumer ? Give reason.

Monjur Alahi

8 views

2025-01-04 04:42

1 Answers

Related Questions

A consumer wants to consume two goods. The prices of the two goods are Rs. 4 and Rs. 5 respectively.

1 Answers 6 Views

The growth rate of per capita income at current prices is higher than that of per capita income at constant prices,

1 Answers 6 Views

A consumer consumes only two Goods X and Y. The Marginal Rate of Substitution is 1. Prices of X and Y are Rs.3 and Rs.4 per unit respectively.

1 Answers 6 Views

A consumer consumes only two Goods X and Y. Marginal Rate of Substitution is 3 and per unit prices of X and Y are Rs. 4 and Rs.2 respectively.

1 Answers 7 Views

A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X rises, the consumers buys less of good X.

1 Answers 10 Views

A consumer consumes only two goods X and Y and is in equilibrium. Show that when price of good X falls,

1 Answers 6 Views

A consumer has total money income of Rs.250 to be spent on two goods X and Y with prices of Rs.25 and Rs.10 per unit respectively.

1 Answers 6 Views

A consumer, Mr. Aman is in state of equilibrium consuming two goods X and Y, with given prices Px and Py. Explain what will happen if :

1 Answers 7 Views

A consumer wants to consume two goods.The prices of the two goods are Rs. 4 and Rs.5 respectively. The consumer's income is Rs. 20.

1 Answers 9 Views

Distinguish between consumer goods and capital goods. Which of these are final goods?

1 Answers 6 Views

Salim Ahmed Kawsar · Accepted Answer · 2023-02-05T15:29:48+06:00

Salim Ahmed Kawsar

The Consumer is not in equilibrium because:

MRS> Px/Py or 2>5/4

The consumer is prepared to pay more for one more unit of X than market demands. So, he will buy more of X and less of Y till MRS falts enough to be equal to P_x/P_y and consumer is in equilibrium again.

8 views Answered 2023-02-05 15:29