This law states that as a consumer consumes more and more units of a commodity, the marginal utility derived from each successive unit goes on declining. This is a fundamental assumption for reaching equilibrium. 3. Equilibrium in Single Commodity Case
The budget line represents all possible combinations of two goods that a consumer can purchase using their entire income at current market prices.
All possible combinations of two goods that a consumer can afford with their income at market prices. consumer equilibrium class 11 notes free
MUXPX=MUYPY=MUMthe fraction with numerator MU sub cap X and denominator P sub cap X end-fraction equals the fraction with numerator MU sub cap Y and denominator P sub cap Y end-fraction equals MU sub cap M
The consumer has complete knowledge of the market. 2. The Concept of Utility This law states that as a consumer consumes
Consumer Equilibrium Class 11 Notes: Free Comprehensive Study Guide
An Indifference Curve is a graphical representation of various combinations of two goods that provide the exact same level of satisfaction to the consumer. Because satisfaction is equal at all points, the consumer remains indifferent between them. Properties of Indifference Curves Equilibrium in Single Commodity Case The budget line
The slope of the Indifference Curve must equal the slope of the Budget Line.