1.

Explain consumer's equilibrium, in case of single commodity, with the help of utility schedule

Answer»

The two conditions are : 

(i) The ratio of marginal utility to price is same in case of all the goods consumed. Suppose the consumer consumes only two goods x and y then 

MU/ Px=MU/ P 

(ii) Marginal utility has a tendency to fall as more and more units are consumed.

Or simply,

A consumer's equilibrium depends upon three factors : 

(i) MU of a product,
(ii) MU of a rupee (money), and
(iii) Price of the product.



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