| Units of X | Price (Px) | Marginal Utility (MUx) | MUx vs Px | Consumer's Action | | :--- | :--- | :--- | :--- | :--- | | 1 | 10 | 20 | MUx > Px | Increase consumption | | 2 | 10 | 16 | MUx > Px | Increase consumption | | 3 | 10 | 10 | MUx = Px | | | 4 | 10 | 4 | MUx < Px | Decrease consumption | | 5 | 10 | 0 | MUx < Px | Stop consumption |
This modern approach uses Indifference Curves and Budget Lines to determine equilibrium without measuring utility in numbers. Indifference Curve (IC) consumer equilibrium class 11 notes free
: Utility is defined as the want-satisfying power of a commodity. It is the satisfaction or benefit a consumer derives from consuming a good or service. | Units of X | Price (Px) |
The consumer reaches equilibrium where the Budget Line is tangent to the Indifference Curve. The consumer reaches equilibrium where the Budget Line
To summarize, a consumer is in equilibrium when they maximize satisfaction from their limited income. This can be explained using two main approaches: