ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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they have spent all of their income.
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a person consumes quantities of three goods.
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a person consumes quantities of two goods.
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satisfaction is maximised for a given level of income.
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Detailed explanation-1: -Consumer’s Equilibrium means a state of maximum satisfaction. 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.
Detailed explanation-2: -A consumer is in equilibrium when he derives maximum satisfaction from the goods and is in no position to rearrange his purchases.
Detailed explanation-3: -As the income of the consumer rises, the budget line as well as the consumer’s equilibrium shifts as well. Thus with each successive upward shift in the budget line, the equilibrium position of the consumer moves upward.
Detailed explanation-4: -Consumer equilibrium can be achieved when – The consumer is satisfied with the goods and services purchased, despite the limitations of income and prices. The equilibrium a consumer reaches is due to the products related to the number of goods and services they buy, thanks to their current income level.
Detailed explanation-5: -There are three conditions for consumer’s equilibrium: (1) The budget line should be tangent to the indifference curve. (2) At the equilibrium point, the slope of the Indifference curve and the budget line should be the same. (3) Indifference curve should be convex to the origin.