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types of equilibrium in consumer theory

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17y ago

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Why does marginal cost tend to increase with output?

It is because of law of dimnishing marginal utility,when the ouput inreases,it also starts increasng as marginal product starts declining after the optimum utilisation of resources.


How diminishing law guides consumer to get equilibrium?

A consumer buys/consumes a product only if marginal utility derived from it is more than marginal utility of money. As he continues consuming the marginal utility derived from every additional unit goes on diminishing but marginal utility of money remains constant. Both utilities match at a place i.e; where marginal utility of product becomes equal to marginal utility of money the consumer stops consumption thus equilibrium is struck.


What is Law of Equi-Marginal Utility?

Law of Equi-Marginal Utility explains how a consumer can get maximum satisfaction out of his expenditure on different goods.


Total utility derived from consumption of a commodity by a consumer will be?

Will Be maximum when its marginal utility is Zero.


Which is a dimension or assumption of the marginal-utility theory of consumer behavior?

The consumer has a small income.


Why does the marginal rate of substitution diminish?

As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumption of a good decreases, its marginal utility goes on increasing.


What are differences between marginal utility and total utility?

Topic Marginal Utility Total Utility 1. Definition Marginal utility is the extra satisfaction which a consumer gets from consuming additional units of goods. Total utility is the sum of total satisfaction of a consumer derives from consumption of a particular good. 2. Feature It can be negative. It can't be negative. 3. Sloping It is downward sloping. It is upward sloping.


What is the difference between marginal utility and indifference curve?

Marginal utility is the satisfaction a consumer receives from consuming an additional unit of a good The indifference curve shows different combinations of 2 goods that the consumer is indifferent towards


How does a consumer maximize total utility?

You maximize utility when marginal utility divided by the price of product A is equal to the marginal utility divided by the price of product B. MUa/Pa=MUb/Pb or MUa/MUb= Pa/Pb


What is the optimal bundle formula for maximizing utility in consumer theory?

The optimal bundle formula for maximizing utility in consumer theory is to allocate your budget in a way that the marginal utility per dollar spent is equal across all goods and services. This is known as the marginal utility theory, where the consumer achieves maximum satisfaction by balancing the additional utility gained from each additional unit of a good with its price.


Clearly differentiate between diminishing marginal utility and diminishing marginal returns?

utility: means a level of satsfection. marginal utility:an extra unit gain my consumer/consumation of addational unit. deminishing marginal utility:when a person reachs his max level of satsfection by consuming a specific product then his utility will be falling by incresing the rate of consuming goods. diminishng marginal return & Diminishing marginal utility is same.


What will be the total utility derived from the consumption of a commodity by a consumer will be if marginal utility is zero?

i don't know the answer. i think it may be minimum or maximum.