Consumer Equilibrium Class 11 Notes Free |best| [POPULAR × 2027]

Assumption: The consumer spends their entire income on a single good (say, Good X), and the price is fixed.

Modern economists like J.R. Hicks and R.G.D. Allen introduced the ordinal approach. This assumes utility cannot be measured numerically but can be ranked in order of preference. What is an Indifference Curve (IC)?

5. Consumer Equilibrium Under Indifference Curve Analysis (Ordinal Approach) consumer equilibrium class 11 notes free

: The consumer buys more units because the benefit exceeds the cost. As consumption increases, MUXcap M cap U sub cap X falls due to the Law of DMU until it equals PXcap P sub cap X If

All units of the commodity must be identical in size, quality, and taste. Assumption: The consumer spends their entire income on

A consumer strikes an equilibrium when the marginal utility of a commodity in terms of money equals its price.

: A line showing all possible combinations of two goods that a consumer can buy with their given income and prices. Allen introduced the ordinal approach

MUn=TUn−TUn−1orMU=ΔTUΔQMU sub n equals TU sub n minus TU sub n minus 1 end-sub space or space MU equals the fraction with numerator cap delta TU and denominator cap delta cap Q end-fraction 2. The Law of Diminishing Marginal Utility (DMU)