Unformatted text preview: position of Mux = 8, Px = 4, Muy = 12 and Py = 6, If the price of X falls to $2 and the price of Y is constant then, Therefore the Mu/P ratio for good X whose price has fallen is now greater than the similar ratio for good Y whose price has not fallen. According to the rule, there will be an increase in the consumption of the cheaper good (X) and a decrease in the consumption of the dearer good (Y)....
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This note was uploaded on 11/26/2011 for the course ECON MICRO ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10