Question

Explain consumer equilibrium in case of single commodity with the help of utility schedule

Answer 1

Answer:

Explanation:

Hey there!

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Consumer's equilibrium refers to a situation in which a consumer gets maximum satisfaction and he has no tendency to bring about any change in his pattern of consumption.

Condition of consumer's equilibrium -: Consumer's equilibrium with respect to purchase of one good is attained when the marginal utility of the good is equal to its price.

Example -: Suppose a consumer is buying orange and the price of each unit of orange is Rs. 4.

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Refer the attachment .

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It is evident from he schedule that the consumer will purchase 4 oranges and reaches an equilibrium position. In this situation, the condition of consumers's equilibrium  (in Rs.) = P is satisfied. At this level of consumption, the marginal utility is equal to the price of orange, i.e., 4 = 4

Answer 2

Answer:

When a consumer purchases the amount of a single good that provides him the most satisfaction, that consumer is said to be in equilibrium.

Explanation:

What is meant by Consumer's equilibrium?

• Consumer's equilibrium is the circumstance in which a consumer experiences maximum happiness on a limited budget and has no propensity to alter his current spending patterns.
• Each unit of the commodity has a price that the consumer must pay. Therefore, he is limited in how much he can buy or consume.
• A customer will be in equilibrium when the ratio of the marginal utility of one good to its price is equal to the ratio of the marginal utility of another good to its price, as stated by the law of equi-marginal utility.
• Mashallian utility analysis states that a consumer has reached equilibrium when their spending has been fully adjusted, or when the marginal value of each direction of their purchases is equal.

Thus, when a consumer is in a state of equilibrium, he or she is able to purchase goods and services at prices that provide him or her the greatest possible satisfaction.

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