Question

Now indicate on your graph and explain the effect of a decrease in the price of biltong on consumer equilibrium.

Write a mathematical equation that illustrates consumer equilibrium for Johannes.

Answer 1

The decrease in price of bitong as shown in the graph

With decrease in price P₁ the consumer is willing to buy quantity Q₂ therefore excess in demand is represented by Q1-Q2 consumers equilibrium shifts from (Pe,Qe) to (P1,Q2)

b.)

mathematical equation on consumer's equilibrium

$\frac{MU_x}{P_X}=\frac{MU_y}{P_Y}$