Chapter 6, Problem 2.5PA

To determine

The Consumer equilibrium in two commodity case given the prices of goods and his budget.

Concept Introduction:

Consumers Equilibrium: In order to maximize his utility, the consumer will spend his income in such a way so that the following condition is satisfied:

$\frac{\text{MU from good} \text{'}\text{x}\text{'}}{\text{Price of good} \text{'}\text{x}\text{'}}=\frac{\text{MU from good} \text{'}\text{y}\text{'}}{\text{Price of good} \text{'}\text{y}\text{'}}$