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प्रश्न
A consumer consumes only two goods X and Y both priced at Rs 3 per unit. If the consumer chooses a combination of these two goods with Marginal Rate of Substitution equal to 3, is the consumer in equilibrium? Give reasons. What will a rational consumer do in this situation? Explain
उत्तर
The consumer reaches equilibrium point only when the following condition is satisfied
`MRS = P_x/P_y`
Given that,
MRS 3
`P_x/P_y = 3/3 = 1`
As MRS is greater than the price ratio, the rational consumer would try to satisfy the condition by increasing the consumption of Good-X and forego the consumption of Good-Y.
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