Suppose satish has ₹88 with him. He intended to purchase good X and good Y with his money. The market price of good X and Y per unit is ₹8. We have to find out that how many units of X and Y should satish purchase, so that he will get maximum satisfaction.
MU Schedule :-
Unit MUx MUy
1 88 40
2 72 36
3 64 24
4 56 20
5 48 16
6 40 12
7 32 08
8 24 04
9 16 00
10 08 00
At equilibrium,
MUx÷Px = MUy÷Py = MUm
and the entire income is spent on commodity-X and commodity-Y.
Since Px = Py = 8,
MUx = MUy = MUm
The consumer gets maximum satisfaction when he purchases 8 units of X and 3 units of Y. Because at this combination, MUx = MUy = 24 and the entire income of Rs 88 gets spent.
MUx÷Px = MUy÷Py = MUm
and the entire income is spent on commodity-X and commodity-Y.
Since Px = Py = 8,
MUx = MUy = MUm
The consumer gets maximum satisfaction when he purchases 8 units of X and 3 units of Y. Because at this combination, MUx = MUy = 24 and the entire income of Rs 88 gets spent.