| Feature | Utility Analysis (Cardinal) | Indifference Curve Analysis (Ordinal) | | :--- | :--- | :--- | | | Utility is measured in 'utils'. | Utility is ranked (preference order). | | Main Tool | Total and Marginal Utility curves. | Indifference Curves and Budget Line. | | Equilibrium Condition | $MU_x / P_x = MU_y / P_y = MU_m$ | $MRS_xy = P_x / P_y$ | | Assumption | Constant MU of money. | Diminishing MRS. |
MUxMUm=Px⟹MUx=Px(Assuming MUm=1)the fraction with numerator cap M cap U sub x and denominator cap M cap U sub m end-fraction equals cap P sub x space ⟹ space cap M cap U sub x equals cap P sub x space open paren Assuming cap M cap U sub m equals 1 close paren MUxcap M cap U sub x = Marginal Utility of commodity X Pxcap P sub x = Price of commodity X MUmcap M cap U sub m = Marginal Utility of Money (worth of a rupee) Schedule and Analysis Consider a product costing ₹10 per unit: Units Consumed MUxcap M cap U sub x Pxcap P sub x Market Comparison Consumer Action Increase Consumption Increase Consumption Decrease Consumption 4. Consumer Equilibrium: Two Commodities Case
Ans: It is convex due to the diminishing MRScap M cap R cap S consumer equilibrium class 11 notes free
This is the by Hicks and Allen. No numbers; only preferences.
The consumer aims to maximize satisfaction and is mentally sound. | Feature | Utility Analysis (Cardinal) | Indifference
If you have any questions about specific parts of these notes, I can: for the Indifference Curve equilibrium
Units must be consumed one after another without time gaps. | Indifference Curves and Budget Line
Consumer equilibrium refers to a situation where a consumer spends their given income on a good or a combination of goods in such a way that they derive maximum satisfaction and do not wish to change their consumption.
The relationship between Total Utility and Marginal Utility is vital for exam diagrams:
As a consumer consumes more and more units of a commodity, the marginal utility derived from each successive unit goes on diminishing. C. Condition for Equilibrium (Single Commodity Case) A consumer reaches equilibrium when: