Question

State the conditions of consumer's equilibrium in case of two commodities​

Answer 1

Consumer Equilibrium in Case of a Two Commodity, With the Help of Utility Analysis. Suppose, a consumer consumes only two goods X and Y. He will attain equilibrium only if he allocates his given income on the purchase of good X and Y in such a way that per rupee MU of both the products is equal and he gets maximum TU.

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Answer 2

In Microeconomics or Consumer Theory,consumer equilibrium in the case of two goods involves equality of the ratio of the marginal utilities and prices of those two goods.

Explanation:

• In Microeconomics or Consumer Theory,consumer equilibrium is signified by a particular consumption phase in which the consumer or buyer satisfaction or utility is maximized from the different combination of goods and services that he or she purchases.
• In the case of two goods or commodities,a consumer or buyer maximizes his or her utility at the point in consumption where the ratio of marginal utility and the price of one good is equal to the ratio of marginal utility and price of another good.
• Marginal utility basically refers to the additional or incremental utility or satisfaction or happiness obtained by any consumer or buyer from consuming additional unit of any good or service.The ratio of the marginal utility and the price of any good implies the additional or incremental satisfaction or happiness received by any consumer or buyer when he or she pays a certain amount of money or price to consume additional unit of any good.
• Therefore,the equality between the ratio of the marginal utilities and prices of two goods basically signifies that the additional satisfaction or happiness obtained by the consumer or buyer from paying money and buying both goods are equal or identical and the overall consumer satisfaction or utility from overall consumption is maximized.This point constitutes the consumer equilibrium under the two goods or commodities mode.