a consumer consumes only 2 goods X and Y , both priced at rs 2 per unit If - Economics - Market Equilibrium

Question

a consumer consumes only 2 goods X and Y , both priced at rs 2 per
unit If the consumer chooses a combination of the two goods with
marginal rate of substitution equals to 2 , is the consumer is
equilibrium ? why or why not ? what will be a rational consumer do
in this situation ? Explain

Shvetika Sharma · Accepted Answer

Dear student,

A consumer attains equilibrium at the point where,
MRS = PxPyAccording to the question, MRS =2PxPy = 22 = 1So, MRS is greater than price ratio
 Thus, to reach the equilibrium point a rational consumer would increase the consumption of good x and decrease that of good y

a consumer consumes only 2 goods X and Y , both priced at rs 2 per unit . If the consumer chooses a combination of the two goods with marginal rate of substitution equals to 2 , is the consumer is equilibrium ? why or why not ? what will be a rational consumer do in this situation ? Explain