After consuming 5 units of a commodity the per rupee MU of x exceeds the marginal utility in money terms. What will consumer do?
Dear Student,
Marginal Utility of Money means the worth of money. The utility a consumer receives from the consumption of goods when he spends money on it. The Consumer will consume more of that good when the Marginal utility in money terms increases. MUx/Px =MU of money, it implies that in the state of equilibrium , the utility derived from money should be equal to the expectation of the consumer.
Regards,
Marginal Utility of Money means the worth of money. The utility a consumer receives from the consumption of goods when he spends money on it. The Consumer will consume more of that good when the Marginal utility in money terms increases. MUx/Px =MU of money, it implies that in the state of equilibrium , the utility derived from money should be equal to the expectation of the consumer.
Regards,