1. Explain consumers equilibrium, in case of Single commodity, with the help of utility schedule.
The law of D.M.V can be used to explain consumers equilibrium in case of a single commodity. Therefore, all the assumptions of Law of D.M.U are taken as assumptions of consumer's equilibrium in case of single commodity.
A consumer purchasing a single commodity will be at equilibrium, when he is buying such a quantity of that commodity which gives him maximum satisfaction. The number of units to be consumed of the given commodity by a consumer depends on 2 factors.
1. Price of the given commodity.
2. Expected utility from each successive unit.
To determine the equilibrium point, consumer compare the price of the given commodity with its utility. Being a rational consumer, he will be at equilibrium when marginal utility is equal to price paid for the commodity.
Consumer Equilibrium in case of Single Commodity.
Units of x
Price (Px)
Marginal Utility
Marginal Utility in units
Difference maximum
1
10
20
20
10
2
10
16
16
6
3
10
10
10
0
4
10
4
4
-6
5
10
0
0
-10
6
10
-6
-6
-16
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answer is 10 Hope is help you
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