When the price of onions is very high, the poor man simply stops buying it. Explain the economics of it, using utility analysis.

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Solution

A consumer buys a commodity only when a rupee spent on it gives rupee worth of satisfaction (MUM). A poor man stops the consumption of onion when he finds that a rupee spent on it does not give rupee worth of satisfaction (no matter what quantity of onions is purchased), so that, MUXPX<MUM.

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