: The IC must be convex to the origin at the point of equilibrium. Summary Table Cardinal Approach Ordinal Approach Measurement Quantifiable (Utils) Ranking (Preferences) Key Law Law of DMU IC Analysis Equilibrium
Proposed by Alfred Marshall. It assumes utility can be measured in absolute numbers called "utils."
Equilibrium is reached when the ratio of marginal utility to price is equal for both goods: Marginal Utility of Money consumer equilibrium class 11 notes free
This law states that as a consumer consumes more and more units of a commodity, the utility derived from each successive unit goes on diminishing.
A consumer is said to be in equilibrium when they maximize their total utility (satisfaction) given their income and the prices of goods, and have no incentive to change their spending pattern. : The IC must be convex to the
The slope of IC (Marginal Rate of Substitution) equals the slope of the Budget Line (Price Ratio).
As a consumer consumes more units of a commodity, the utility derived from each successive unit decreases. A consumer is said to be in equilibrium
An economic agent who uses goods and services to satisfy wants.
The units of the commodity must be standard (e.g., a cup of water, not a spoonful).