Q. 15

Describe th

Answer :

Consumer’s equilibrium represents the condition of balance attained by end users of products. It refers to the quantity of services as well as goods that can be bought by them provided their current level of income in addition to that of prices.

The following assumptions are made to assess equilibrium location of consumers:

• Rationality – Consumers are assumed to be rational who wish to receive maximum satisfaction provided the prices as well as his income.

• Ordinal utility – Consumers are assumed to be capable of ranking their preference as per the satisfaction of every combination of goods.

• Persistency of choice – Consumers are assumed to be consistent with preference of goods.

• Perfect competition – It is assumed that there exists perfect competition in market from where consumers are buying the goods.

• Complete utility - It is assumed that complete utility of consumers is based on amounts of goods consumed.

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