Application in Consumption

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Application in  Consumption

householder in setting his purchase ours to reach an equilibrium position. i.e.. a position satisfaction from his scheme of purchases. We have adapter how a consumer attains equilibrium with the Mystique, With any given slim of money and at any given   the quantity of each commodity that he should.

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Purchase to maximize his satisfaction. He must select one of the many possible combinations of the two goods that he can purchase. These various possibilities lie on an indifference curve. Out of these. the combination that he chooses gives him the maximum satisfaction. For this purpose. he will try to reach the highest possible indifference curve touching the price line; all other points on the price line will lie on a lower indifference curve.

In the world of reality, a consumer has not to purchase only two goods but a number of them. But the indifference curve technique can be adapted even to represent this reality by making axis of Y represent money which is a general purchasing power. i.e., all goods. With a change in the planned expenditure or in the price of a commodity, the purchase plan of the consumer will have to be revised. Such changes can be shown on the indifference curve.

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Application in Consumption