The income of a consumer is spent by him on two goods X and Y. The marginal utility of the goods at the present level of consumption are equal to each other. However, the price of good X is double that of good Y. The consumer, in order to attain equilibrium, will

Option 1 -> This would worsen the disequilibrium as X already provides less utility per rupee spent.

Option 2 -> Since MUx/Px < MUy/Py (because MUx = MUy but Px = 2Py), consumer gets more utility per rupee from Y. Increasing Y consumption (decreasing MUy) and decreasing X consumption (increasing MUx) will restore equilibrium.

Option 3 -> Cannot increase X without adjusting Y when income is fixed and fully spent.

Option 4 -> Consumer is NOT in equilibrium since MUx/Px = MUx/(2Py) which is less than MUy/Py.

Hence, Option 2: Increase the consumption of Y and decrease the consumption of X -> The equilibrium condition for a consumer is MUx/Px = MUy/Py. Currently, MUx = MUy and Px = 2Py, so MUx/Px = MUy/(2Py) which equals (1/2)(MUy/Py). This means MUx/Px < MUy/Py, indicating that the consumer gets more marginal utility per rupee spent on good Y than on good X. To reach equilibrium, the consumer should increase consumption of Y (which will lower MUy by the law of diminishing marginal utility) and decrease consumption of X (which will raise MUx), until the ratio of marginal utility to price becomes equal for both goods. -> correct