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Home Questions H7BGYUC537
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Arrange the following concept emerges in context of consumer equilibrium.

(A) Transfer his expenditure from Good Y to Good X.
(B) Sacrifice more of Good Y to gain Good X.
(C) Till, Marginal Rate of Substitution (MRSxy) = Market Rate of Exchnage.
(D) Suppose, Marginal Rate of Substitution (MRSxy) > Market Rate of Exchnage.

Choose the correct answer from the options given below:

Options:

(A), (B), (C), (D)

(D), (B), (A), (C)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer:

(D), (B), (A), (C)

Explanation:

The correct answer is Option (2) → (D), (B), (A), (C)

  • (D) Suppose, Marginal Rate of Substitution (MRSxy) > Market Rate of Exchange. This means the consumer is willing to give up more of Good Y than the market requires to get one unit of Good X.

  • (B) Therefore, the consumer will sacrifice more of Good Y to gain Good X. The consumer starts adjusting their consumption by buying more of Good X and less of Good Y.

  • (A) The consumer will transfer expenditure from Good Y to Good X until balance is achieved.

  • (C) The process continues till MRSxy = Market Rate of Exchange, which is the condition for consumer equilibrium.

 

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