Consumer Equilibrium refers to a situation where a consumer spends their given income on the purchase of a commodity (or combination of commodities) in such a way that they get maximum satisfaction (utility) and have no tendency to change their spending pattern.
: 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
| Approach | Condition | Meaning | | :--- | :--- | :--- | | | $MU_x = P_x$ | Marginal Utility equals Price. | | Two Commodity (Cardinal) | $\fracMU_xP_x = \fracMU_yP_y = MU_m$ | Marginal Utility per rupee is equal across all goods. | | Indifference Curve (Ordinal) | $MRS_xy = \fracP_xP_y$ | Slope of Indifference Curve equals Slope of Budget Line. | Consumer Equilibrium refers to a situation where a