refers to a situation where a consumer maximizes their total utility (satisfaction) given their income and the prices of goods and services. At this point, the consumer has no tendency to change their spending pattern.
For a consumer to achieve equilibrium, two conditions must be met:
| Point | Position | Satisfaction | Conclusion | |-------|----------|--------------|-------------| | Inside budget line | Below IC | Lower utility | Income not fully spent | | On budget line but not tangency | IC intersects | Lower utility | MRS ≠ price ratio | | Beyond budget line | Unattainable | Not possible | Income constraint | consumer equilibrium class 11 notes
A consumer is in equilibrium using IC analysis when two conditions are met: MRS
Here, the satisfaction per rupee is for the last unit of both goods. refers to a situation where a consumer maximizes
Rahul spends his money one rupee at a time on whichever item gives higher MU per rupee.
Find the consumer's equilibrium.
Based on Hicks & Allen. Utility is not numerically measurable; only ranking matters.
Rahul is a Class 11 student who just received his monthly pocket money: . He heads to his school canteen during the break, facing a classic economic problem: Unlimited wants (he’s hungry) vs. Limited Resources (₹100). Rahul spends his money one rupee at a