Suppose that marginal utilityof good A is 4 times the marginal utiltiy of good b, but the proce of...

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Suppose that marginal utilityof good A is 4 times the marginal utiltiy of good b, but the proce of good Ais only 2 times the proce of ggod b. Is this point consumer equilibrium? if not what will occur?

Robert · Accepted Answer

It is not the point of consumer equilibrium. The marginal utility approach tells that consumer 
maximise his or her utility and reaches at equilibrium when he or she spends all income and 
the marginal utility of the last dollar spent on X and Y are the same.

Suppose that marginal utilityof good A is 4 times the marginal utiltiy of good b, but the proce of good Ais only 2 times the proce of ggod b. Is this point consumer equilibrium? if not what will...

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