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Theory Of Consumer Behaviour
Question
When does a consumer attain equilibrium according to indifference curve approach?
Solution
A consumer attains equilibrium at a point where budget line is tangent to indifference curve. At this point slope of indifference curve (called MRS) is equal to slope of budget line (price ratio).
Some More Questions From Theory Of Consumer Behaviour Chapter
Distinguish between 'Change in demand' and 'Change in quantity demanded of a commodity'.
Starting from an initial situation of consumer's equilibrium, suppose that marginal utility of a rupee increases. Will it increase or decrease the quantity demanded of the product?
What are two approaches to attain the state of consumer's equilibrium?
Define indifference curve.
What is meant by marginal rate of substitution (MRS)?
Why is MRS always diminishing?
When does a consumer attain equilibrium according to indifference curve approach?
Give meaning of demand.
Name two determinants of demand.
List the factors that cause changes in demand.
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Mock Test Series
Mock Test Series