Consumer Equilibrium: Class 11 Notes Free !!exclusive!!

| Units Consumed | TU (Total) | MU (Marginal) | Trend | | :---: | :---: | :---: | :--- | | 1 | 10 | 10 | Rising TU | | 2 | 22 | 12 | Rising TU | | 3 | 30 | 8 | Rising but slow | | 4 | 34 | 4 | TU maximum (Saturation) | | 5 | 34 | 0 | TU constant | | 6 | 30 | -4 | TU falling |

PXPYthe fraction with numerator cap P sub cap X and denominator cap P sub cap Y end-fraction Conditions for Equilibrium under IC Approach

When MU is zero, TU reaches its maximum point (Point of Satiety). When MU becomes negative, TU starts to decline. 3. Law of Diminishing Marginal Utility (DMU)

The budget line shows all possible combinations of two goods that a consumer can buy using their entire income at current market prices. consumer equilibrium class 11 notes free

: Equilibrium is reached when the ratio of MU to price is equal for all goods:

TU=U1+U2+U3+…+UnTU equals cap U sub 1 plus cap U sub 2 plus cap U sub 3 plus … plus cap U sub n

[ \fracMU_xP_x = \fracMU_yP_y = MU_m ]

MRSxy=PxPyMRS sub x y end-sub equals the fraction with numerator cap P sub x and denominator cap P sub y end-fraction

: The additional utility derived from consuming one more unit of a commodity.

“I feel perfect,” Rohan said. “No craving for more.” | Units Consumed | TU (Total) | MU

Utility cannot be measured in numbers but can be through preferences.

The consumer stops at 3 apples where ( MU = Price ).