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State the conditions of consumer's equilibrium in case of two commodities |
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Answer» <P> Solution :Consumer's Equilibrium in case of two commodities is determined when: (i) The ratio of MARGINAL UTILITY to Price is same in case of both the GOODS, i.e., `(MU_(x))/(P_(x)) = (MU_(y))/(P_(y)) " Or " (MU_(x))/(MU_(y)) = (P_(x))/(P_(y))`, (ii) MU falls as consumption increases. |
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