Final answer:
The concept in question deals with utility maximization in economics, where the price ratio of two goods should equal the ratio of their marginal utilities. Additionally, by knowing the supply equation and a certain price, we can determine the supply quantity provided by producers.
Step-by-step explanation:
The student's question touches upon the concept of utility maximization in economics, specifically the relationship between the price of goods and their respective marginal utilities. In a scenario where the price of good 1 varies with the quantity consumed (x_1), while the price of good 2 (p_2) is fixed, an important principle comes into play. This principle is that at the utility-maximizing point, the ratio of the prices of the two goods should be equal to the ratio of their marginal utilities. In mathematical terms, this is expressed as: (Price of Good 1) / (Price of Good 2) = (Marginal Utility of Good 1) / (Marginal Utility of Good 2) In addition, if we know the supply equation and the price at which consumers are purchasing a good, we can determine the quantity that producers are willing to supply. For example, if consumers purchase 12 units of a good when the price is $2 each, plugging the price of $2 into the supply equation will give us the quantity supplied by producers.