Saved Bookmarks
| 1. |
Given the price of a good, how will a consumer decide as to how much quantity to buy of that goods ? Explain. |
|
Answer» Given price of goods, consumer purchases that much of the commodity where rupee worth of additional satisfaction MUx / Px from the consumption of unit more of goods is equal to the marginal utility, of Money (MUm) for the consumer. So that, in a state of equilibrium: MUx / Px. So long as MU > P he keeps on purchasing. As he makes purchases, MU falls and at a particular quantity of the goods, MU becomes equal to price. Consumer purchases up to this point. |
|