A consumer consumes two goods X and Y. What will happen if MU_(x)//P_(x) is greater than MU_(y)//P_(y)?

A consumer consumes two goods X and Y. What will happen if MU_(x)//P_(

1.	A consumer consumes two goods X and Y. What will happen if MU_(x)//P_(x) is greater than MU_(y)//P_(y)?
Answer» Solution :if `MU_(X)//P_(x)` is greater than `MU_(y)//P_(y)`, the CONSUMER is getting more marginal utility in case of good X as compared to Y. Therefore, he will BUY more of X and LESS of Y. This will lead to fall in `MU_(x)` and Rise in `MU_(Y)` . The consumer will continue to buy more of X till `MU_(x)//P_(x)` = `MU_(y)//P_(y)`