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Unformatted text preview: equilibrium position has been established. In this equilibrium position, the consumer reduces the consumption of good X, which has become ’dearer’. Instead of 2 units, only 1 unit of X is purchased and $6 are spent on good X. The remaining $4 are now spent on purchasing two units of good Y. Once again the Mu/P ratio for the two goods has been equated with its value ’8’ for the new combination. The consumer who is continually maximizing his utility keeps on making such readjustments whenever the market price of goods changes....
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- Fall '10
- equilibrium position, Readjuster Party