Hope this helps you ace your Class 11 Economics exam. Study smart, not hard!
The IC must be convex to the origin at the point of equilibrium. 3. Key Terms for Exams
Priya smiled. “That’s . You maximized total utility. And your free notes show the formula: MUx/Px = MUy/Py = MU of last rupee spent on each good .” consumer equilibrium class 11 notes free
A budget line slopes downwards, as buying more of one good means buying less of the other with a fixed income. Its slope is given by the price ratio Px/Py .
One day, his friend Priya said, “Rohan, you’re always broke. You need to understand ‘Consumer Equilibrium’.” Hope this helps you ace your Class 11 Economics exam
Condition 1: MUxPx=MUyPy=MUmCondition 1: the fraction with numerator cap M cap U sub x and denominator cap P sub x end-fraction equals the fraction with numerator cap M cap U sub y and denominator cap P sub y end-fraction equals cap M cap U sub m
All possible combinations of two goods that a consumer can afford with their income at market prices. You maximized total utility
This is the considered more realistic because it doesn't assume utility is measurable.
The sum total of satisfaction derived from consuming all units of a commodity.
To achieve equilibrium, a consumer's preferences must be matched against their financial constraints.
The slope of IC (Marginal Rate of Substitution) equals the slope of the Budget Line (Price Ratio).