Equilibrium in economic terms is when the price of goods demanded by the consumers is equal to the quantity supplied by the suppliers.
Consumer equilibrium is when the consumer has attained maximum satisfaction from a given product, with his income and the price of the commodity fixed.
A consumer strikes his equilibrium when the rupee worth of marginal utility received by the consumer equals the marginal utility of money (rupee worth of satisfaction that the consumer wishes to get).MUXPX=MUM
There are three conditions for consumer’s equilibrium:
(1) The budget line should be tangent to the indifference curve.
(2) At the equilibrium point, the slope of the Indifference curve and the budget line should be the same.
(3) Indifference curve should be convex to the origin.
Final Answer:
The condition of consumer’s equilibrium is that the ratio of marginal utility of the price of one goods is equal to the ratio of marginal utility of other goods to its price.
There are three conditions for consumer’s equilibrium:
(1) The Budget line should be Tangent to the Indifference Curve.
(2) At the equilibrium point, the Slope of the Indifference Curve and the Budget Line should be the same.
(3) The Indifference curve should be Convex to the Origin.