A consumer, Mr. Aman is in state of equilibrium consuming two goods X and Y, with given prices P_(x) " and " P_(y). Explain what will happen if: (a) MU_(x)//P_(x) is greater than MU_(y)//P_(y), (b) P_(y) falls.

A consumer, Mr. Aman is in state of equilibrium consuming two goods X

1.	A consumer, Mr. Aman is in state of equilibrium consuming two goods X and Y, with given prices P_(x) " and " P_(y). Explain what will happen if: (a) MU_(x)//P_(x) is greater than MU_(y)//P_(y), (b) P_(y) falls.
Answer» SOLUTION :If MU(x)//P(x) is greater than MU(y)//P(y), then this would INDUCE Mr. Aman to buy more of X in place of Y.b) If P(y) falls then Mr. Aman will CONSUME more of GOOD Y.