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Utility & Consumer's Equilibrium · Question 65 of 73

Question 65

MediumOriginal question

Read the two statements and choose the correct option.

I. If Pₓ = ₹5, Pᵧ = ₹10 and MUₓ = 20, then at equilibrium MUᵧ = 40.

II. If Pₓ = ₹5, Pᵧ = ₹10 and MUₓ = 20, then at equilibrium MUₘ = 4.

Options for question 65

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. MUₓ ÷ Pₓ = 20 ÷ 5 = 4, so MUₘ = 4 and II is true.

  2. MUᵧ ÷ 10 must also be 4, so MUᵧ = 40 and I is true.

Concept
Using the equi-marginal condition
Typical time
70 s
Your time
—
The rule this testsEquilibrium with two goods
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