Day 8 | Micro economics | Consumer's Equilibrium | Chapter 2 | One Shot
Rajat Arora・2 minutes read
Consumer equilibrium is achieved when maximum satisfaction is obtained from the goods or services consumed, maintaining a balance between expenditure and utility. The law of diminishing marginal utility explains how satisfaction decreases gradually with each additional unit consumed, leading to consumer rationality in maximizing total satisfaction independently.
Insights
- The Law of Diminishing Marginal Utility explains that as consumption of a commodity increases, the satisfaction gained from each additional unit consumed decreases gradually. This law is crucial in understanding consumer behavior and how total satisfaction is impacted by consuming more of a good or service.
- Consumer Equilibrium is achieved when a consumer maximizes satisfaction from the goods or services consumed while staying within budget constraints. This balance is crucial for rational consumer decision-making, ensuring that expenditure is optimized to gain the highest level of satisfaction possible.
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Recent questions
What is consumer equilibrium?
Consumer equilibrium is achieved when maximum satisfaction is obtained from the goods or services consumed.
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