Answer to Question #233135 in Microeconomics for Binaya

Question

Explain consumer’s equilibrium with the help of indifference map and a budget line

Answer 1

Consumer equilibrium refers to a situationwhere derives maximum satisfaction subject to given prices and income. The maximum satisfaction is reached by studying indifference map and budget line together.

The budget line shows combinations of the two commodities that can be purchased with available income so that the price for each of these combinations is equivalent to the income of consumer.

The Indifference Map is the graphical representation of two or more indifference curves showing the several combinations of different quantities of commodities, which consumer consumes, given his income and the market price of goods and services.