Category: 2. Consumer’s Equilibrium

What is Consumer’s Equilibrium? The term equilibrium is used frequently in economic analysis. It is a state of rest or a position of no change, which under a situation provides the maximum gain. A consumer is said to be in equilibrium when he has derived maximum satisfaction and does not want to change his consumption level. Hence, Consumer’s…

While drawing a budget line, it is assumed that the income of the consumer and the price of the commodities is constant. Therefore, there will be a shift in the budget line when there is either a Change in the Income of the Consumer or a Change in the Price of the Commodity. What is…

What is Budget Line? The term budget line refers to a graphical representation of all the potential combinations of two commodities that can be bought within a certain income and price, and all of these combinations provide the same satisfaction level. It comes with the condition that the cost of each combination must be less than or…

What is Indifference Curve ? A curve or a graphical representation of the combination of different goods providing the same satisfaction level to the consumer is known as Indifference Curve. One cannot put a numerical value on the level of satisfaction gained from the consumption of goods. However, they can tell their preference between two goods, i.e.,…

What is Consumer’s Equilibrium? The term equilibrium is used frequently in economic analysis. It is a state of rest or a position of no change, which under a situation provides the maximum gain. A consumer is said to be in equilibrium when he has derived maximum satisfaction and does not want to change his consumption level. Hence, Consumer’s…

What is Diminishing Marginal Utility (DMU)? According to the Law of Diminishing Marginal Utility (DMU), with the consumption of more and more units of a commodity, the utility obtained from each successive unit decreases. Most consumers spread their income among different varieties of goods when making choices. People prefer a variety of goods as consuming more…

What is Utility Analysis? Consumers are the ones who make the majority of consumption decisions. A consumer is someone who buys goods and services to fulfil demands. He makes choices about the kinds of items to be bought to fulfil his desires. The primary goal is to maximise satisfaction from the goods and services he purchases…

What are Needs and Wants? Human life is intricately woven with the interplay of needs and wants, forming the tapestry of our existence. Needs represent the fundamental requisites for survival and well-being, encompassing essential elements such as food, water, shelter, and clothing. These are universal constants that cut across cultural boundaries and stand as the…

Consumer Behaviour is the study of individual customers, organizations, or groups’ behaviour while selecting, purchasing, using, and disposing of the goods, ideas, and services so they can meet their wants and needs. In simple terms, consumer behaviour is the study of consumers’ actions and reactions in the marketplace and the reason behind their actions.  Consumer A…