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Explain Conditions of consumer equilibrium under …

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Explain Conditions of consumer equilibrium under IC analysis
  • 1 answers

Vishal Singh 6 years, 11 months ago

When MRSxy=Px/Py u will find tha consumer is in equilibrium. Whether if he is not fulfilling position, he will be in a position where in (i)MRSxy < Px/Py (ii)MRSxy>Px/Py If he is in (i) position he will consume more of good x as in thia position he is gaining more satisfication while consuming commodity X this will enforces him to consume more of commodity X as compare to commodity Y and after a certain level of consumption he will fulfill level of equilibrium. If he is in (ii) position he will consume more of good Y as in thia position he is gaining more satisfication while consuming commodity Y this will enforces him to consume more of commodity Y as compare to commodity X and after a certain level of consumption he will fulfill level of equilibrium.
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