Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and $10, respectively.   If the consumer is observed to buy 5 units of X and 10 units of Y, where the respective Marginal Utilities of X and Y are, 50 and 40 utils, is the consumer in equilibrium? Explain why or why not. If the consumer is not in equilibrium under conditions in d), suggest another combination that would possibly achieve equilibrium. Explain your answer.

Economics For Today
10th Edition
ISBN:9781337613040
Author:Tucker
Publisher:Tucker
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 22SQ
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Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and $10, respectively.

 

If the consumer is observed to buy 5 units of X and 10 units of Y, where the respective Marginal Utilities of X and Y are, 50 and 40 utils, is the consumer in equilibrium? Explain why or why not.

If the consumer is not in equilibrium under conditions in d), suggest another combination that would possibly achieve equilibrium. Explain your answer.

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