Economy, asked by prithipal3701, 8 months ago

Write any 4 assumptions of Consumer's Equilibrium using Ordinal / Indifference Curve approach.​

Answers

Answered by mohamedshaheedh2712
1

Answer:

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Explanation:

Consumers equilibrium is the amount of goods the consumer can buy in the market given his/her current level of income.

There are two conditions for consumers equilibrium:

1) The first is that the budget line should tangent to the indifference curve or marginal rate of substitution of good X for Good Y (MRS

xy

) must be equal to the price ratio . i.e MRS

x

y = P

x

/P

y

2) The indifference curve should be convex to the origin at the point of tangency.

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