Question

On the consumption of $10$ units of a commodity, a consumer finds that rupee worth of $M{U}_X$ has exceeded the marginal utility of money. Should he reduce the consumption of $X$ so that he strikes an equilibrium? Give answer in support of your answer.

Answer 1

Given, $\frac{M{U}_X}{P_X}>M{U}_M$ when $10$ units of the commodity are consumed.
The consumer should not reduce, rather increase the consumption the consumption of commodity $X$ in order to achieve equilibrium. Only when the consumption of $X$ is increased that $M{U}_X$ will reduce, so that $\frac{M{U}_X}{P_X}$ becomes equal to $M{U}_M$.