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What are the conditions of consumer,s equilibrium. Explain?
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What are the conditions of consumer,s equilibrium. Explain?
The following conditions apply to achieve the consumer equilibrium:
1.Budget line should be tangent to the indifference curve-because only at this point does the consumer get maximum satisfaction and it is within his budget.
2. Slope of the price line should be equal to the slope of the indifference curve-consumers only get maximum satisfaction at a point where the price line is tangent to the highest possible indifference curve from below.
3.Indifference curve should be convex to the origin-this ensures that at the point of equilibrium ,the marginal rate of substitution is diminishing.
1.Budget line should be tangent to the indifference curve-because only at this point does the consumer get maximum satisfaction and it is within his budget.
2. Slope of the price line should be equal to the slope of the indifference curve-consumers only get maximum satisfaction at a point where the price line is tangent to the highest possible indifference curve from below.
3.Indifference curve should be convex to the origin-this ensures that at the point of equilibrium ,the marginal rate of substitution is diminishing.
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What are the conditions of consumer,s equilibrium. Explain?
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What are the conditions of consumer,s equilibrium. Explain? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What are the conditions of consumer,s equilibrium. Explain? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the conditions of consumer,s equilibrium. Explain?.
What are the conditions of consumer,s equilibrium. Explain? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What are the conditions of consumer,s equilibrium. Explain? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the conditions of consumer,s equilibrium. Explain?.
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