Question

Diagrammatically show consumer's equilibriumusing Indifference Curve Analysis.​

Answer 1

Answer:

The objective of the consumer is to obtain the highest level of utility with the given income he earns. ... So, to reach the equilibrium, the consumer tries achieve the balance between his budget and the maximum utility he gets. This happens at the point where the budget curve becomes a tangent to an indifference curve.The indifference curve I1 is the locus of the points L, M, N, P, Q, and R, showing the combinations of the two goods X and Y between which the consumer is indifferent. Such a diagram is known as an indifference map where each indifference curve corresponds to a different indifference schedule of the consumer.