Economy, asked by priyanshkoshta708, 1 year ago

Explain equilibrium in case of one commodity users utility approach

Answers

Answered by aradhyamehra1
1
The Law of DMU can be used to explain consumer’s equilibrium in case of a single commodity. Therefore, all the assumptions of Law of DMU 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 (Marginal utility) from each successive unit.

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