what
do you Consumers equilibrium? Explain consumer equilibrium in case of a
Single Commodity.
Answers
Hello !
Consumer equilibrium
The state of balance obtained by an end-user of products that refers to the number of goods and services they can buy given their existing level of income and the prevailing level of cost prices.
Consumer’s Equilibrium in case of Single Commodity:
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.
Hope It Helps u :)