Question

What do you understand by consumer equilibrium ? show consumer equilibrium with the help of indifference curve anlysis?

Answer 1

Heya..

Consumer equilibrium means the stage of maximum satisfaction when the consumer is spending it's income on different goods within their market price..

It struck in case of Indifference Curve analysis...

When the rate at which consumer is willing to substitute a good for other one is coincide with the rate at which market allows it to subsitute..

It's condition..

* Indifference Curve should be convex ..

* MRS= Px / Py...