Consumer Behaviour and Demand Test - 5

In economics, an indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. ... In other words, an indifference curve is the locus of various points showing different combinations of two goods providing equal utility to the consumer.

The cofficient of price elastcity of demand is always negative which shows the inverse relationship between price and demand of a commodity if one of them increases the other decreases

Utility, in economics, refers to the usefulness or enjoyment a consumer can get from a service or good. Marginal utility is the utility gained by consuming an additional unit of a service or good.

In ordinal utility, the consumer only ranks choices in terms of preference but we do not give exact numerical figures for utility.
For example, we prefer a BMW car to a Nissan car, but we don ’t say by how much.

An indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. Along the curve, the consumer has no preference for either combination of goods because both goods provide the same level of utility.
Each indifference curve is convex to the origin, and no two indifference curves ever intersect.

The law of diminishing marginal utility is a law of economics stating that as a person in creases consumption of a products while keeping consumption of other product costant , there is a decline in the marginal utility that persob derives from consuming each additional unit of product.

MU decrease then TU increases at decreasing rate till MU becomes zero. when MU zero then TU maximum and when MU gets negative TU starts fall

Explanation:
Total utility refers to the overall satisfaction or happiness derived from consuming a certain quantity of a good or service. To maximize total utility, we need to consider the relationship between marginal utility and total utility.
Marginal utility refers to the additional utility or satisfaction gained from consuming an additional unit of a good or service. It is the change in total utility when one more unit is consumed.
To understand when total utility is maximum, we need to consider the relationship between marginal utility and total utility.
When marginal utility is positive, total utility is increasing. As more units are consumed, the additional satisfaction gained from consuming each additional unit decreases (diminishing marginal utility). Eventually, marginal utility reaches zero and starts to decline, indicating that the total utility is maximized.
Therefore, total utility is maximum when marginal utility is zero. This is because it is at this point that consuming an additional unit no longer increases total utility.
To summarize, total utility is maximum when marginal utility is zero.

This is because in perfect competition , price line is a straight line. And the ratio (∆TR/∆Q )That is change in total revenue and change in output is constant.{MR=AR}So slope of a straight line is always constant.

Each indifference curve is convex to the origin, and no two indifference curves ever intersect. Consumers are always assumed to be more satisfied when achieving bundles of goods on higher indifference curves. If a consumer 's income increases, the curve will move higher up on a graph because the consumer can now afford more of each type of good.