Economics Exam > Economics Questions > Mr. X consumes commodities A and B whose pric...
Start Learning for Free
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7?
Verified Answer
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per...
This question is part of UPSC exam. View all Economics courses
Most Upvoted Answer
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per...
Understanding Equilibrium in Consumption
When analyzing Mr. X's consumption of commodities A and B, we consider the concept of consumer equilibrium. This occurs when the consumer maximizes their utility given their budget constraints.
Prices and Marginal Utility
- Price of Commodity A: Rs. 6 per unit
- Price of Commodity B: Rs. 8 per unit
- Marginal Utility of A (MU_A): 7
- Marginal Utility of B (MU_B): 7
Condition for Equilibrium
To determine if Mr. X is in equilibrium, we use the formula for the marginal utility per rupee spent on each commodity:
- MU_A / Price of A = 7 / 6 = 1.17
- MU_B / Price of B = 7 / 8 = 0.875
Analysis of Marginal Utility per Rupee
- The marginal utility per rupee for commodity A (1.17) is greater than that for commodity B (0.875).
- This indicates that Mr. X derives more utility from each rupee spent on commodity A compared to commodity B.
Conclusion: Is Mr. X in Equilibrium?
Since the marginal utility per rupee spent on commodity A is higher than that of commodity B, Mr. X is NOT in equilibrium.
- Recommendation: To increase utility, Mr. X should consume more of commodity A and less of commodity B until the marginal utilities per rupee equalize.
By adjusting his consumption, he can achieve optimal utility and reach equilibrium in his consumption choices.
When analyzing Mr. X's consumption of commodities A and B, we consider the concept of consumer equilibrium. This occurs when the consumer maximizes their utility given their budget constraints.
Prices and Marginal Utility
- Price of Commodity A: Rs. 6 per unit
- Price of Commodity B: Rs. 8 per unit
- Marginal Utility of A (MU_A): 7
- Marginal Utility of B (MU_B): 7
Condition for Equilibrium
To determine if Mr. X is in equilibrium, we use the formula for the marginal utility per rupee spent on each commodity:
- MU_A / Price of A = 7 / 6 = 1.17
- MU_B / Price of B = 7 / 8 = 0.875
Analysis of Marginal Utility per Rupee
- The marginal utility per rupee for commodity A (1.17) is greater than that for commodity B (0.875).
- This indicates that Mr. X derives more utility from each rupee spent on commodity A compared to commodity B.
Conclusion: Is Mr. X in Equilibrium?
Since the marginal utility per rupee spent on commodity A is higher than that of commodity B, Mr. X is NOT in equilibrium.
- Recommendation: To increase utility, Mr. X should consume more of commodity A and less of commodity B until the marginal utilities per rupee equalize.
By adjusting his consumption, he can achieve optimal utility and reach equilibrium in his consumption choices.
|
|
Explore Courses for Economics exam
|
|
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7?
Question Description
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? for Economics 2024 is part of Economics preparation. The Question and answers have been prepared according to the Economics exam syllabus. Information about Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? covers all topics & solutions for Economics 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7?.
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? for Economics 2024 is part of Economics preparation. The Question and answers have been prepared according to the Economics exam syllabus. Information about Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? covers all topics & solutions for Economics 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7?.
Solutions for Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? in English & in Hindi are available as part of our courses for Economics.
Download more important topics, notes, lectures and mock test series for Economics Exam by signing up for free.
Here you can find the meaning of Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? defined & explained in the simplest way possible. Besides giving the explanation of
Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7?, a detailed solution for Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? has been provided alongside types of Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? theory, EduRev gives you an
ample number of questions to practice Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per unit Does Mr. X strike equilibrium when he is MU of A equal to 7 and that 8 equal to 7? tests, examples and also practice Economics tests.
|
|
Explore Courses for Economics exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup