A= if price is more...and MU is less..then rxn is negative towards commodity...n comsumer consume less commodity

b=if price is less..and MU is more ...then rxn is always positive towards commodity...n consumer consumes more and more units of commodity

Reaction of the Consumer when Price Ratio is Higher than the Marginal Rate of Substitution:

When the price ratio is higher than the marginal rate of substitution (MRS), it means that the consumer has to give up more of one good to consume an additional unit of the other good. In this case, the consumer's reaction can be explained as follows:

1. Decreased Demand for the Good with Higher Price:
- The consumer will tend to reduce the consumption of the good that has a higher price in relation to the other good.
- This is because the consumer perceives the higher price as a higher opportunity cost, making it less desirable to consume additional units of that good.

2. Increased Demand for the Good with Lower Price:
- Conversely, the consumer will increase the consumption of the good that has a lower price in relation to the other good.
- The lower price is seen as a lower opportunity cost, making it more attractive to consume additional units of that good.

3. Substitution Effect:
- The consumer will substitute the relatively cheaper good for the relatively more expensive good.
- This is driven by the desire to maximize utility by consuming more of the relatively cheaper good, which provides a higher level of satisfaction per unit of money spent.

4. Shift in Consumption Pattern:
- The consumer's consumption pattern will shift towards the good with the lower price.
- The consumer will allocate a larger portion of their budget to the relatively cheaper good, resulting in a higher quantity consumed.

5. Equilibrium Adjustment:
- The consumer will continue adjusting their consumption until the price ratio equals the marginal rate of substitution.
- At the new equilibrium, the consumer's preferences and budget constraint are aligned, and the consumer maximizes utility given their income and the prices of the goods.

Reaction of the Consumer when Price Ratio is Lower than the Marginal Rate of Substitution:

When the price ratio is lower than the marginal rate of substitution (MRS), it means that the consumer can trade less of one good for more of the other good. The consumer's reaction to this situation can be explained as follows:

1. Increased Demand for the Good with Higher Price:
- The consumer will tend to increase the consumption of the good that has a higher price in relation to the other good.
- The lower price is perceived as a lower opportunity cost, making it more desirable to consume additional units of that good.

2. Decreased Demand for the Good with Lower Price:
- Conversely, the consumer will reduce the consumption of the good that has a lower price in relation to the other good.
- The higher price is seen as a higher opportunity cost, making it less attractive to consume additional units of that good.

3. Income and Substitution Effects:
- The consumer experiences both income and substitution effects.
- The income effect arises from the fact that the consumer can now afford to consume more of both goods due to the lower price ratio.
- The substitution effect occurs as the consumer substitutes the relatively more expensive good for the relatively cheaper good to maximize utility.

4. Shift in Consumption Pattern:
- The consumer's consumption pattern will shift towards the good with the higher price.
- The consumer will allocate a larger portion of their budget to the relatively more expensive good, resulting in a higher quantity consumed.

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