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Consumer Equilibrium Class 11 Notes Free Patched

Consumer Equilibrium is the state where a consumer achieves maximum satisfaction

Equilibrium quantity = 3 apples.

  1. Ignoring the "income constraint": Equilibrium is not just about equal ratios; the consumer must spend their entire income.
  2. Forgetting the law of diminishing MU: Without this, the equilibrium condition is unstable.
  3. Misdrawing the tangency: In IC analysis, the budget line is a straight line; the IC is convex. They touch at exactly one point.
  4. Confusing ( MU ) with ( TU ): Equilibrium is based on Marginal utility, not Total utility.

Assumptions:

[ MRS_xy = \fracP_xP_y ] And the IC must be convex to the origin. consumer equilibrium class 11 notes free

Part 1: What is Consumer Equilibrium?

  1. Indifference Curve (IC): A curve showing different combinations of two goods that give the consumer equal satisfaction.