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Starting from an initial situation of consumer's equilibrium state, how does increase in marginal utility of one rupee affect the quantity demanded of a product? |
Answer» Solution :QUANTITY demanded will decrease because of corresponding to higher MU of one RUPEE. MU of the commodity should also be higher which is possible only when CONSUMPTION (quantity demanded ). decrease It can be EXPLAINED with the help of the following SCHEDULE and diagram and assuming price of quantity X to be 1 and for consumer MU of a rupee is 20 units. As is given in the question if marginal utility Rupee increases (let if increases to 30 units), then Quantity will decrease . It can be shown with the help of schedule and diagram . 
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