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MICROECONOMICS CH : 3 CONSUMER'S EQUILIBRIUM UTILITY ANALYSIS — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 3 CONSUMER'S EQUILIBRIUM UTILITY ANALYSIS3 Marks
Question
Mr. X consumes two commodities A and B whose prices are ₹6 and ₹8 per unit respectively. Does the Mr. X strikes his equilibrium when he is getting marginal utility of A equal to 7 and. that of B also equal to 7?
✓

Answer

We know that, Mr. X strikes his equilibrium when:
$\frac{M U_A}{P_A}=\frac{M U_B}{P_B}$
$\frac{M U_A}{P_A}=\frac{7}{6}$
and $\frac{M U_B}{P_B}=\frac{7}{8}$
Here, $\frac{7}{6}  >  \frac{7}{8}$ or $\frac{M U_A}{P_A} \neq \frac{M U_B}{P_B}$. Therefore, Mr. X does not strike his equilibrium.

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