is a state where a consumer gets maximum satisfaction from their income and has no tendency to change their spending pattern.
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A consumer purchasing a single commodity (let's say Good X) compares the Marginal Utility of X ( MUxMU sub x ) with its Price ( Pxcap P sub x consumer equilibrium class 11 notes free
The consumer is in equilibrium at the point where the Budget Line is tangent to the highest possible Indifference Curve [1]. Slope of IC ( MRSxycap M cap R cap S sub x y end-sub ) = Slope of Budget Line (
: The consumer buys more units because the benefit exceeds the cost. As consumption increases, MUXcap M cap U sub cap X falls due to the Law of DMU until it equals PXcap P sub cap X If is a state where a consumer gets maximum
Due to the Law of DMU, as the consumer gets more of Good X, their willingness to sacrifice Good Y decreases. Hence, MRS diminishes. 5. The Budget Line and Budget Set
Consumer Equilibrium Class 11 Notes: Free Comprehensive Guide Slope of IC ( MRSxycap M cap R
Comprehensive Notes on Consumer Equilibrium: Class 11 Microeconomics
A consumer reaches equilibrium when the ratio of MU to price is the same for all goods. (Marginal Utility of Money) 3. The Indifference Curve (IC) Approach (Ordinal Utility)
(Due to diminishing Marginal Rate of Substitution).
MRSxy=ΔYΔXMRS sub x y end-sub equals the fraction with numerator cap delta cap Y and denominator cap delta cap X end-fraction