The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-If a consumer is buying only two goods, A and B, then he or she will be in equilibrium only when MU_a = MU_b.

Question

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-If a consumer is buying only two goods, A and B, then he or she will be in equilibrium only when MU_a = MU_b.

Quizplus · Accepted Answer

A consumer is in equilibrium when the marginal utility per dollar spent on each good is equal, i.e., MU_a/P_a = MU_b/P_b, where P is the price of the goods.

The Below Figure Shows the Various Combinations of the Goods