IlI. Circle the two correct answers in the parentheses. \"X\" and Y\" are two co

Question

IlI. Circle the two correct answers in the parentheses. "X" and Y" are two commodities. e unit price of X is $10 per unit, while the unit price of Y is $5 per unit. The consumer currently has purchased 7 units of X and 12 units of Y The MU of the 7th unit of X is 25, and the MU of the 12th unit of Y is 15. The consumer, therefore, (is, is not) in an equilibrium situation. He or she should buy less units of (X, Y) while buying more units of the other in order to reach equilibrium where his or her total utility is maximized

Explanation / Answer

MUX/PX = 25/10 = 2.5

MUY/PY= 12/5 = 2.4

Since MUX/PX> MUY/PY

Therefore consumer is not in equilibirum. Consumer should buy more of x in order to reach equilibirum.

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