Re: Discussion Problem_(12)

Posted by Sumit on May 23, 2013; 5:48pm
URL: http://discussion-forum.276.s1.nabble.com/Discussion-Problem-12-tp7581189p7581191.html

From the utility function U(x,y) = x+y we can easily infer that for the consumer both the goods are perfect substitutes.
Thus, If P1<P2 then consumer will only consume X, n X=M/p1.
& If P1>P2 then consumer will only consume Y, & Y=M/p2.
and If P1=p2 then consumer will consume X belongs to interval [0,M/p1].(i.e any value in these interval) & Y=M/p1-X.