Question

What is meant by consumer equilibrium ?state its condition in case of a single commodity

Answer 1

What is meant by consumer equilibrium ?

Consumer Equilibrium. When consumers make choices about the quantity of goods and services to consume, it is presumed that their objective is to maximize total utility.

state its condition in case of a 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.

Answer 2

Answer:

The term "consumer's equilibrium" refers to a condition in which a consumer derives maximum happiness from his current income and has no desire to change his current spending habits.

Explanation:

• The term "consumer's equilibrium" refers to a condition in which a consumer derives maximum happiness from his current income and has no desire to change his current spending habits.
• In other words, a consumer is in equilibrium when he considers his current behaviour to be the best possible under the circumstances and does not feel compelled to modify it as long as the conditions do not change.
• One Commodity Case: Consumer Equilibrium A consumer's decision to buy a product is influenced by three factors:

1. The commodity's price.
2. The commodity's marginal (and total) utility.
3. Money's marginal usefulness.

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