Consumer Equilibrium Class 11 Notes Free =link= Jun 2026
| Approach | Name | Key Concept | Applicability | | :--- | :--- | :--- | :--- | | | Single Commodity Case | MU(_x) = P(_x) | One good only | | 2 | Two Commodity Case | ( \fracMU_xP_x = \fracMU_yP_y = MU_m ) | Multiple goods (real life) |
Consumer Equilibrium Class 11 Notes: The Ultimate Guide to Maximum Satisfaction
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 consumer equilibrium class 11 notes free
MUn=TUn−TUn−1orMU=ΔTUΔQMU sub n equals TU sub n minus TU sub n minus 1 end-sub space or space MU equals the fraction with numerator cap delta TU and denominator cap delta cap Q end-fraction 2. The Law of Diminishing Marginal Utility (DMU)
This is due to the Diminishing Marginal Rate of Substitution (MRS). | Approach | Name | Key Concept |
Condition: MUxMUm=PxorMUtx=PxCondition: the fraction with numerator cap M cap U sub x and denominator cap M cap U sub m end-fraction equals cap P sub x space or space cap M cap U t sub x equals cap P sub x MUxcap M cap U sub x = Marginal Utility of good Pxcap P sub x = Price of good MUmcap M cap U sub m = Marginal Utility of Money (assumed to be constant) : The consumer buys more units. This lowers MUxcap M cap U sub x until it equals Pxcap P sub x : The consumer cuts down consumption. This raises MUxcap M cap U sub x until it equals Pxcap P sub x Case B: Two Commodities Case (Law of Equi-Marginal Utility) When spending income on two goods (
The consumer is in equilibrium at the point where the Budget Line is tangent to the highest possible Indifference Curve [1]. Slope of IC ( MRSxycap M cap R cap S sub x y end-sub ) = Slope of Budget Line ( This lowers MUxcap M cap U sub x
): The sum total of satisfaction derived from consuming all units of a commodity. Marginal Utility ( MUcap M cap U
PXPYthe fraction with numerator cap P sub cap X and denominator cap P sub cap Y end-fraction Conditions for Equilibrium under IC Approach
: The consumer’s budget and market prices remain constant during the analysis. Diminishing Marginal Utility
Now his basket: . Total spend = ₹35. He still has ₹15 left, but the next unit of either gives only 1 util per rupee, which is less than the value of money. He stops.