If the household consumes along the budget constraint where MUx/Px > MUy/Py then assuming normal preferences, we are sure that?
- Price of X is greater than price of Y
- MUx > MUy
- The household could increase his total utility by consuming more of X and less of Y
- Household is not spending all his income
Explanation
- Consumers maximize utility when MUx/Px = MUy/Py.
- Here, MUx/Px > MUy/Py means good X gives more satisfaction per rupee.
- So the consumer should buy more X and less Y.
- This increases total utility until equilibrium is reached.
Last verified on 24-04-2026
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