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Which of the following is the consumer equilibrium according to Alfred Marshall
A. MU=price
b. tangency of IC and budget line
c. TU maximum and MU zero
d. tangency of demand curve and price line?
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Which of the following is the consumer equilibrium according to Alfred...
Consumer Equilibrium According to Alfred Marshall
Consumer equilibrium, according to Alfred Marshall, is achieved when the consumer maximizes their total utility (TU) subject to their budget constraint.

Key Points:
- MU=price: In consumer equilibrium, the marginal utility (MU) derived from the last unit of a good consumed is equal to its price. This means that the consumer is allocating their income in such a way that the additional satisfaction gained from consuming one more unit of a good is equal to the price they pay for it.
- Tangency of IC and budget line: Another way to achieve consumer equilibrium is when the indifference curve (IC) representing the consumer's preferences is tangent to the budget line. This point of tangency indicates that the consumer is maximizing their utility given their budget constraint.
- TU maximum and MU zero: Consumer equilibrium can also be reached when the total utility (TU) is at its maximum and the marginal utility (MU) of the last unit consumed is zero. This implies that the consumer is deriving the maximum satisfaction possible from their consumption choices.
- Tangency of demand curve and price line: This option is not consistent with Alfred Marshall's theory of consumer equilibrium. While the demand curve does play a role in determining consumer behavior, it is the marginal utility and budget constraint that are key factors in achieving equilibrium according to Marshall.
In conclusion, consumer equilibrium, as defined by Alfred Marshall, involves maximizing total utility while considering the marginal utility of each good consumed and staying within budget constraints. The concepts of marginal utility, indifference curves, and budget lines are central to understanding consumer behavior and achieving equilibrium in consumption choices.
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Which of the following is the consumer equilibrium according to Alfred Marshall A. MU=priceb. tangency of IC and budget line c. TU maximum and MU zerod. tangency of demand curve and price line?
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Which of the following is the consumer equilibrium according to Alfred Marshall A. MU=priceb. tangency of IC and budget line c. TU maximum and MU zerod. tangency of demand curve and price line? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is the consumer equilibrium according to Alfred Marshall A. MU=priceb. tangency of IC and budget line c. TU maximum and MU zerod. tangency of demand curve and price line? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is the consumer equilibrium according to Alfred Marshall A. MU=priceb. tangency of IC and budget line c. TU maximum and MU zerod. tangency of demand curve and price line?.
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