InterviewSolution
Saved Bookmarks
InterviewSolution
| 1. |
types pf consumer equilibrium |
| Answer» 3rd one is consumer equlibrium with IC<br>Consumer’s Equilibrium\xa0refers to a situation where a consumer gets maximum satisfaction out of his given money income and given market price.2. Consumer’s equilibrium\xa0through utility analysis can be ascertained with reference to:\tA single commodity\tTwo or several commodities(a) Single Commodity Consumer Equilibrium:(i)\xa0When purchasing a unit of a commodity, a consumer compares its price with the expected utility from it. Utility obtained is the benefit, and the price payable is the cost. The consumer compares benefit and the cost. He will buy the unit of a commodity only if the benefit is greater than or at least equal to the cost.(ii)\xa0Equilibrium Conditions for Single Commodity Consumer Equilibrium(b) Two Commodities Consumer Equilibrium (Law of Equi-Marginal Utility or Law of Substitution or Gossen’s Second Law or Law of Maximum Satisfaction)(i)\xa0According to the two commodities consumer equilibrium or law of Equi-marginal utility, a consumer gets maximum satisfaction, when ratios of MU of two commodities and their respective prices are equal. | |