Consumer’s equilibrium in two commodities case the law of diminishing marginal utility is applicable only in the case of either one commodity or single use of a commodity. however, in reality, consumers consume more than one commodity; therefore, in those cases, the law of equi marginal utility is used as it helps in the optimum allocation of. For practical problems of ‘consumer’s equilibrium in case of single commodity’, refer examples 4 to 7 (section 2.9) and 2 unsolved problems given in the exercise. consumer’s equilibrium in case of two commodities: the law of dmu applies in case of either one commodity or one use of a commodity.
The law of equi marginal utility states that a consumer will attain equilibrium when the ratio of marginal utility of one commodity to its price is equal to the ratio of the marginal utility of another commodity to its price. let a consumer buy two commodities i.e. x and y. then at equilibrium. mux px m u x p x. 1. marginal utility of the last rupee spent on each good is the same. 2. marginal utility of a commodity falls as more of it is consumed. let us understand the consumer’s equilibrium in the case of two commodities with an example. suppose a consumer has to spend ₹. 24 on two commodities i.e. x and y. A situation where a consumer spends his given income purchasing one or more commodities so that he gets maximum satisfaction and has no urge to change this level of consumption, given the prices of commodities, is known as the consumer’s equilibrium. (b) condition of consumer equilibrium in case of a single commodity. Consumer equilibrium is a very popular economics concept. this is because it helps to explain how consumers maximize their utility by consuming one or more commodities. moreover, it also assists consumers in ranking the combination of two or more commodities on the basis of their taste and preference. table of contents.
A situation where a consumer spends his given income purchasing one or more commodities so that he gets maximum satisfaction and has no urge to change this level of consumption, given the prices of commodities, is known as the consumer’s equilibrium. (b) condition of consumer equilibrium in case of a single commodity. Consumer equilibrium is a very popular economics concept. this is because it helps to explain how consumers maximize their utility by consuming one or more commodities. moreover, it also assists consumers in ranking the combination of two or more commodities on the basis of their taste and preference. table of contents. There are two necessary conditions of consumer’s equilibrium in case of two commodities. , the ratio of mu and price is same in case of both the goods. we know that in case of the consumption of a single commodity, say commodity x, the consumer is at equilibrium when, mu m = mu x p x. similarly, a consumer consuming another commodity, say. 14consumer's equilibriumwe buy many goods and serv. ces to satisfy our wants. using up of goods and services to satisfy wants is called consumption and the economic agent who buys goods and serv. ces is called a consumer. when a consumer buys any good or service, his her main objective is to get maximum satisfaction from the quantity of the.
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