Conclusion of consumers equilibrium under ordinal and cardinal approach
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Cardinal Approach to Consumer Equilibrium. Definition: The Cardinal approach to Consumer Equilibrium posits that the consumer reaches his equilibrium when he derives the maximum satisfaction for given resources (money) and other conditions.
Explanation:
from time to time, different theories have been advanced to explain consumer’s demand for a good and to derive a valid demand theorem.
Cardinal utility analysis is the oldest theory of demand which provides an explanation of consumer’s demand for a product and derives the law of demand which establishes an inverse relationship between price and quantity demanded of a product.
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