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Homework Answers
(MUT / MUM ) > (PT / PM)
it implies that, (MUT / PT ) > (MUM / PM)
At optimal point, (MUT / PT ) = (MUM / PM)
In the given scenario to fulfill the optimality condition, there is need to increase the consumption of Potatoes and decrease the cosnumtpion of Meat.
An increase in the consumption of Potatoes will decrease the MUT. Hence, the (MUT / PT ) will fall.
And at the same time, a decrease in the consumption of meat will increase the MUM. Hence, the (MUM / PM) will raise.
A decrease in (MUT / PT ) because of an increase in potatoes consumption and an increase in (MUM / PM) because of a decrease in meat consumption leads to achieving the optimality condition.]
Therefore, Rinzin should buy more potatoes and less meat.
Answer: Option (D)
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