Consumer’s Equilibrium through Indifference Curve Analysis:
Since a consumer encompasses a limited income, he spends it in such a way so as to acquire maximum level of satisfaction. He will achieve equilibrium whenever he acquires maximum satisfaction from his expenditure on various goods. Under the utility analysis elucidated former, a consumer acquires maximum satisfaction whenever marginal utilities from his various purchases are equivalent. We can also elucidate the equilibrium of the consumer with the help of the indifference curve analysis. For our analysis, we have to make the assumptions shown below:
(a) The consumer has prior to him an indifference map for a pair of goods state, tea and biscuits. This map symbolizes the preferences of the consumer for the two goods. It is supposed that his scales of preferences stay constant at a specified time.
(b) The consumer has a fixed sum of money to spend on two goods. It is supposed that he will spend the sum on both the goods and not save any portion of it.
(c) The prices of such goods are specified in the market and are supposed to be constant.
(d) The consumer is supposed to act rationally and maximize his satisfaction.
The consumer’s indifference map for good X Y is specified in figure below; it symbolizes four scales of preferences of a consumer for two goods. Indifference curves to the right symbolize higher satisfaction. The consumer would like to select a combination of good X and good Y that will be on the highest indifference curve. However his choice will depend upon his income and the price of two goods.To understand the extent of buy goods with specified prices and income of the consumer, budget line is significant.
Latest technology based Economics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Theory of Consumer Behavior help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Theory of Consumer Behavior, project ideas and tutorials. We provide email based Theory of Consumer Behavior help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Theory of Consumer Behavior. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Economics Homework help and assignment help services. They use their experience, as they have solved thousands of Economics assignments, which may help you to solve your complex issues of Theory of Consumer Behavior. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!