Question
Hello, I have one question about consumer equilibrium. Is the consumer equilibrium constrained by the budget? Take my case as an example; the equilibrium price
Hello,
I have one question about consumer equilibrium. Is the consumer equilibrium constrained by the budget? Take my case as an example; the equilibrium price is at 4 units of Rocks (the marginal utility per dollar should be 1.81 to be equal to the utility of Camping) and 6 units of Campings. Still, the budget does not allow me to spend that much. So, is the consumer equilibrium defined both by the maximum value of my budget and the combination of goods that will yield the most benefit for me; Or we need to plug in data to the formula MU1/P1=MU2/P2 to find the consumer equilibrium without any regard to the budget constraint?
Thank you.
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