[ \fracMU_xP_x = \fracMU_yP_y = MU_m ]
| Units | ( MU_x ) | ( MU_y ) | | :---: | :---: | :---: | | 1 | 16 | 11 | | 2 | 14 | 10 | | 3 | 12 | 8 | | 4 | 10 | 6 | consumer equilibrium class 11 notes free
We must adjust MU for money. Utility from the good (MU of apple) must equal Utility lost by spending money (MU of money = Price). [ \fracMU_xP_x = \fracMU_yP_y = MU_m ] |
As a consumer consumes more and more units of a commodity, the Marginal Utility derived from each successive unit falls . consumer equilibrium class 11 notes free