Starting from initial situation of consumer equilibrium, if price of the commodity rises, where will consumer equilibrium be determined ?

Starting from initial situation of consumer equilibrium, if price of t

1.	Starting from initial situation of consumer equilibrium, if price of the commodity rises, where will consumer equilibrium be determined ?
Answer» Solution :For initial SITUATION of CONSUMER equilibrium, refer to section 2.4.1. We have studied in that section that consumer equilibrium is DETERMINED at 3 units of the COMMODITY where MU=Price =Rs.3 Now the consumer has to buy less Le, 2 units as here MU(Rs.)=Price(Rs.) This can be shown in the diagram also Initially, the price was Rs.3, accordingly, consumer equilibrium was determined at POINT E .i.e, 3 units Now after increase in price from Rs.3 to Rs.4. consumer equilibrium is determined at point `E_1` i.e., at 2 units. Therefore, the consumer buys less than before.