As you consume more of a good, the satisfaction from each additional unit drops. Equilibrium Condition (Single Commodity):
Developed by Hicks and Allen, this assumes consumers can only rank their preferences. Consumer Equilibrium Class 11 Notes
In equilibrium, we also consider the Marginal Utility of Money ($MU_m$). The equilibrium condition can also be written as: $$\fracMU_xP_x = MU_m$$ This means the utility per rupee spent on the commodity is equal to the utility of a rupee. As you consume more of a good, the
The IC must be convex to the origin at the point of equilibrium. Consumer Equilibrium Class 11 Notes
A line showing all possible combinations of two goods that a consumer can buy given their income and market prices.
: Consumer increases consumption because benefit exceeds cost.