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

Consumer Equilibrium — Class 11 Notes (Free)

Key concepts

  • Consumer equilibrium: The point where a consumer maximizes utility given a budget constraint.
  • Utility: Satisfaction from consuming goods.
    • Price of 1 Apple = ₹10
    • MU of 1st apple = ₹20 (Buy: Benefit > Cost)
    • MU of 2nd apple = ₹10 (Equilibrium: Benefit = Cost)
    • MU of 3rd apple = ₹5 (Stop: Benefit < Cost)

    Try 2 units of Y: MU(_y)/P(_y) = 5.5. Not equal. ❌

    A. Single Commodity Case (Marginal Utility Analysis)

    Assumption: The consumer spends their entire income on a single good (say, Good X), and the price is fixed. consumer equilibrium class 11 notes free

    • The consumer reaches equilibrium at point E on the IC diagram.
    • At Point E: The slope of the IC ($MRS_xy$) equals the slope of the Budget Line ($P_x/P_y$).
    • Any point to the left or right of E will either be unaffordable or yield lower satisfaction.

    : Downward sloping, convex to the origin (due to diminishing Marginal Rate of Substitution ), and higher ICs represent higher satisfaction. Budget Line Consumer Equilibrium — Class 11 Notes (Free) Key

    Definition: Consumer equilibrium refers to a situation where a consumer spends their given income on a good or a combination of goods in such a way that they derive maximum satisfaction and do not wish to change their consumption. Consumer equilibrium: The point where a consumer maximizes

    Part 7: Free Downloadable Summary Table (Revision Ready)

    Consumer Equilibrium in One Glance:

    Why is this equilibrium?