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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?
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Mr. X consumes commodities A and B whose price are Rs. 6 and 8 Rs. Per...
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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.
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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?
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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?.
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