This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
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....
View Full Document
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