If $\frac{M U_{X}}{P_{X}} > \frac{M U_{Y}}{P_{Y}}$ , the consumer should buy more of commodity-Y and less of commodity-X.

True

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False

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Solution

The correct option is B False
A consumer will purchase more of good X in order to decrease the marginal utility of good X so that he can achieve equilibrium by equating the utility derived from both the goods.

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Similar questions

\frac{M U_{X}}{P_{X}} = \frac{M U_{Y}}{P_{Y}}

M U_{X} = M U_{Y} = M U_{M}

P_{X}

P_{Y}

\frac{P_{X}}{P_{Y}} > \frac{M U_{X}}{M U_{Y}}

\frac{P_{X}}{P_{Y}} = \frac{M U_{X}}{M U_{Y}}

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 :

a. MUx / Px is greater than MUy / Py.

b. Py falls

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