↑
MU, P |
| MU (falls as Q↑)
| /
| /
| /
| / Equilibrium at E (MU = P)
| / |
Price | / | Price line (horizontal)
(P) | / |
|/________|______→
Q* Quantity
As a consumer consumes more units of a good, the additional utility from each successive unit falls.
Free question bank for Class 11:
Consumer Equilibrium in One Glance:
| Approach | Condition | Formula | When to use | | :--- | :--- | :--- | :--- | | Single good | ( MU = P ) | ( MU_x = P_x ) | One commodity case | | Two goods (Utility) | Equi-marginal | ( MU_x/P_x = MU_y/P_y ) | Measurable utility | | Ordinal (IC) | Tangency | ( MRS = P_x/P_y ) | Realistic preferences | consumer equilibrium class 11 notes free
| Feature | Utility Analysis (Cardinal) | Indifference Curve Analysis (Ordinal) | | :--- | :--- | :--- | | Measurement | Utility is measured in 'utils'. | Utility is ranked (preference order). | | Main Tool | Total and Marginal Utility curves. | Indifference Curves and Budget Line. | | Equilibrium Condition | $MU_x / P_x = MU_y / P_y = MU_m$ | $MRS_xy = P_x / P_y$ | | Assumption | Constant MU of money. | Diminishing MRS. | ↑ MU, P | | MU (falls as