Formula 2: MU=ΔTUΔQFormula 2: cap M cap U equals the fraction with numerator cap delta cap T cap U and denominator cap delta cap Q end-fraction (Where is the change in total utility and is the change in quantity consumed). The Relationship Between TU and MU
Don't just memorize the conditions; understand why the consumer moves back to equilibrium if they are at a different point (e.g., if , why they buy more). Define Terms: Clearly define Utility, Budget Line, and MRS. Frequently Asked Questions What happens if the price of a good changes? If the price of a good (e.g.,
This approach assumes utility can be measured in numerical units called Total Utility (TU): consumer equilibrium class 11 notes free
Assumes utility can be measured in numbers (Utils). This approach was championed by Alfred Marshall.
Formula 1: MUn=TUn−TUn−1Formula 1: cap M cap U sub n equals cap T cap U sub n minus cap T cap U sub n minus 1 end-sub Formula 2: MU=ΔTUΔQFormula 2: cap M cap U
| Units | ( MU_x ) | ( MU_x / P_x ) | ( MU_y ) | ( MU_y / P_y ) | | :--- | :--- | :--- | :--- | :--- | | 1 | 20 | 5 | 16 | 8 | | 2 | 16 | 4 | 14 | 7 | | 3 | 12 | 3 | 12 | 6 | | 4 | 8 | 2 | 10 | 5 | | 5 | 4 | 1 | 8 | 4 |
: The consumer decreases consumption because the cost is higher than the benefit. Frequently Asked Questions What happens if the price
: The consumer gets more satisfaction than the price paid. They will consume more, and MUxcap M cap U sub x will fall (due to LDMU) until If
Consumer Equilibrium Class 11 Notes: Free Comprehensive Guide