Question

MUx = MUy the consumer is not choosing the best affordable (feasible) bundle of goods

Py Py x and y. Explain why?

Answer 1

MU_x=is the satisfaction(utility) extracted from consuming extra unity of commodity X and MU$y$ =satisfaction extracted from consuming an extra unit of product Y,therefore given the prices of X and Y ,

MU_x=MU_y,is not the formular for the best affordable bundle.

hence the best bundle give the price is:

$\frac{MUx}{MUy}=\frac{Px}{Py}$ ,where p_x and p_y,are the prices and the budget is given.