When consumer spend his given income on different commodities then consumer is in equilibrium

Consumer Equilibrium - Part 2
Consumer equilibrium occurs when a consumer maximizes their satisfaction given their budget constraints. In this part, we delve into the conditions of consumer equilibrium and the concept of indifference curves.

Conditions for Consumer Equilibrium
To achieve consumer equilibrium, the following conditions must be satisfied:

• MRS = Price Ratio: The marginal rate of substitution (MRS) between two goods must equal the ratio of their prices (P1/P2). This indicates that the consumer is willing to give up the same amount of one good for another based on their prices.
• Utility Maximization: The consumer allocates their income in such a way that the last unit of currency spent on each good provides the same level of additional satisfaction (marginal utility).

Indifference Curves
Indifference curves represent combinations of goods that provide the same level of satisfaction. Key features include:

• Downward Sloping: Represents the trade-off between two goods. As you consume more of one good, you consume less of another to maintain the same utility level.
• Convex to the Origin: Reflects diminishing marginal rates of substitution; as a consumer has more of one good, they are willing to give up less of the other good.
• Higher Curves Represent Higher Utility: Curves further from the origin indicate higher levels of satisfaction.

Budget Line
The budget line represents all combinations of two goods that a consumer can purchase given their income and the prices of the goods. The point of tangency between the budget line and the highest indifference curve indicates consumer equilibrium.

Conclusion
Understanding consumer equilibrium is key for analyzing consumer behavior. By applying the principles of MRS, utility maximization, and budget constraints, consumers can achieve optimal satisfaction from their purchases.