: The additional satisfaction derived from consuming one more unit ( Law of Diminishing Marginal Utility (DMU)
Each curve represents a distinct level of satisfaction. The Consumer's Budget Line
: The consumer is getting more satisfaction than the price paid, so they will increase consumption. consumer equilibrium class 11 notes free
A consumer will consume a good up to the point where the Marginal Utility (in money terms) is equal to the price of the commodity.
MUn=TUn−TUn−1orMU=ΔTUΔQMU sub n equals TU sub n minus TU sub n minus 1 end-sub space or space MU equals the fraction with numerator cap delta TU and denominator cap delta cap Q end-fraction 2. The Law of Diminishing Marginal Utility (DMU) : The additional satisfaction derived from consuming one
There are two main approaches to determining equilibrium in Class 11:
Utility is the want-satisfying power of a commodity. It is a subjective measure of satisfaction. MUn=TUn−TUn−1orMU=ΔTUΔQMU sub n equals TU sub n minus
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.
