Answer to Question #279899 in Microeconomics for Jen

Question

A consumer has 150ph to spend on 2 goods. Discuss/Explain how he is going to attain his consumer equilibrium with the interplay of his budget and his level of satisfaction

Answer 1

Solution:

The Consumer will choose his baskets of goods by equating marginal utility of a good to its price, which is a marginal cost of consumption.

The consumer is in equilibrium when he maximizes his utility, given his income and the market prices. A consumer is said to have attained equilibrium when he spends given income or budget in such a way as to yield optimum satisfaction, given the prices of two goods and the consumer's preference