+3 votes
in Class 12 by kratos

What happens if MUX / Px>MUY /PY ?

1 Answer

+2 votes
by kratos
 
Best answer

In this situation, the buyer buys more of good X than Y since he is deriving more utility from good X. As he keeps on good buying more units of good X, the MU on good X keeps on falling while the MU on good Y keeps on rising due to Law of diminishing marginal utility effect. In other words, the good which is sacrificed, the ** to have more of it increase,& therefore on every additional unit of goods X the MU on good Y rises. The Process continues till both MUX/PX & MUY/PY are equal to each other.

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