what is necessary condition for consumers equilibrium under indifference curve analysis
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what is necessary condition for consumers equilibrium under indifference curve analysis
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Answer:
Thus the consumer's equilibrium under the indifference curve theory must meet the following two conditions: First: A given price line should be tangent to an indifference curve or marginal rate of satisfaction of good X for good Y (MRSxy) must be equal to the price ratio of the two goods
Answer:
Consumers equilibrium is the amount of goods the consumer can buy in the market given his/her current level of income.
There are two conditions for consumers equilibrium:
1) The first is that the budget line should tangent to the indifference curve or marginal rate of substitution of good X for Good Y (MRSxy) must be equal to the price ratio . i.e MRSxy = Px/Py
2) The indifference curve should be convex to the origin at the point of tangency.
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