September 12, 2020

Comparative Statics of Consumer Behavior

Leave a Comment / Microeconomics, Study Materials /

Introduction The theory of consumer behavior and demand is grounded on the assumption that consumers try to allot limited money income among available goods and services to maximize satisfaction. The consumer purchases to maximize satisfaction subject to the constraint that these purchases do not exceed the consumer’s limited money income. Thus, for the theory of […]

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Consumer’s Equilibrium with Indifference Curve Approach

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Introduction A consumer attains his/her equilibrium when he/she maximizes his/her total utility, given his/her income and the prices of the two commodities. We combine the indifference curves and the budget line on the same diagram to illustrate the consumer’s equilibrium graphically. The indifference curve in the utility analysis assumes that the consumer tries to maximize

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