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Consumer's Equilibrium

Concept of utility, Law of DMU, cardinal and ordinal approaches to consumer equilibrium.

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Topics(6)

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Concept of Utility: TU & MU

Meaning of utility, measurement in utils and money, total utility, marginal utility, and TU-MU relationship.

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Law of Diminishing Marginal Utility

Statement, assumptions, and diagrammatic explanation of the Law of DMU — Gossen's First Law.

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Consumer's Equilibrium: Cardinal Approach

Consumer equilibrium using cardinal utility — single commodity (MU = Price) and two commodities (Law of Equi-Marginal Utility) with schedules and diagrams.

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4

Indifference Curve Analysis

Ordinal utility approach, indifference curve, indifference map, MRS, monotonic preferences, and properties of indifference curves.

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5

Budget Line & Budget Set

Budget line, budget set, algebraic expression, slope, price ratio, properties, and effects of changes in income and prices.

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6

Consumer's Equilibrium: Ordinal Approach

Consumer equilibrium using indifference curve analysis — conditions (MRS = Price Ratio, MRS falls), tangency approach, and comparison of cardinal vs ordinal utility.

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