How would you as a consumer change your consumption basket when the rate at which you are willing to substitute good x for good y is higher thann the rate at which market allows you to do it?
Dear student,
The given situation means that MRS > Price ratio. In such a situation to attain equilibrium the ​consumer would increase consumption of X and reduce that of Y.
The given situation means that MRS > Price ratio. In such a situation to attain equilibrium the ​consumer would increase consumption of X and reduce that of Y.