Answer to Question #233136 in Microeconomics for Binaya

Question

What is consumer’s equilibrium? Explain the income effect in the consumer’s equilibrium

in normal and inferior good

Answer 1

Consumer equilibrium tends to be a point where the derived utility of a consumer from a product is at the maximum, provided the product's fixed income and price level.

when the income of consumers increase, the budget line tends to shift upward and parallel. When income adjusts, new consumer's equilibrium is developed.