Mahatma Joytiba Phule Rohilkhand University
Lecture Notes
Managerial Economics
6.7 CONSUMER ’S EQUILIBRIUM
Principle of equi-borderline mileage occupies an important place in cardinal mileage
analysis. It's through this principle that consumer’s equilibrium is explained. A
consumer has a given income which he has to spend on colorful goods he wants.
Now, the question is how he'd allocate his given plutocrat income among colorful
goods, that's to say, what would be his equilibrium position in respect of the
purchases of the colorful goods. It may be mentioned then that consumer is assumed
to be ‘ rational ’, that is, he precisely calculates serviceability and backups one good for
another so as to maximise his mileage or satisfaction.
A consumer is in equilibrium when given his tastes, and price of the two
goods, he spends a given plutocrat income on the purchase of two goods in such a
way as to get the maximum satisfaction, According to Koulsayiannis, “ The consumer
is in equilibrium when he maximises his mileage, given his income and request prices. ”
hypotheticals
The incuriosity wind analysis of consumer’s equilibrium is grounded on the
following hypotheticals
1) The consumer’s incuriosity chart for the two goods X and Y is grounded on
his scale of preferences for them which doesn't change at each in this
analysis.
