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MUX of X is 40 and MUY of Y is 30. It the price of Y is ?9, then the price of X at equilibrium will be _________
?9
? 30
? 15
?12
To solve this, we use the concept of consumer equilibrium where the ratio of the marginal utility to price of each good should be equal.
- MUX of X is 40.
- MUY of Y is 30.
- Price of Y is ?9.
- Consumer Equilibrium requires: \( \frac{MU_{X}}{P_{X}} = \frac{MU_{Y}}{P_{Y}} \).
Plug in the values for Y:
- \(\frac{30}{9} = \frac{MU_{X}}{P_{X}}\)
- \(\frac{10}{3} = \frac{40}{P_{X}}\)
Solve for \(P_{X}\):
- \(P_{X} = \frac{40 \cdot 3}{10} = 12\).
- Option 1: ?9 - This would imply equality if X also has a price that corresponds to a MU of 27, not 30.
- Option 2: ?30 - Implies lower utility per unit cost compared to Y.
- Option 3: ?15 - Implies mismatch in MU per price equivalency.
- Option 4: ?12 - Correct equilibrium price for X when matched with the given MU values and costs.
Correct Answer: Option 4: ?12
By: Parvesh Mehta ProfileResourcesReport error
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