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Indifference Curves and Consumer Equilibrium
1.
2. Consumer equilibrium
The budget line shown
does not allow a consumer
to reach this indifference
curve. It lies beyond their
feasible set of
consumption possibilities.
Sausages
Chicken
Wings
0
BL1
IC1
3. Consumer equilibrium
IC2 can be reached but
most of the combinations
on this indifference curve
involve not spending all of
the available budget.Sausages
Chicken
Wings
0
BL1
IC1
IC2
4. Consumer equilibrium
Consumer equilibrium is
reached at the point of
tangency between the
budget line and the
highest-attainable
indifference curve.
Sausages
Chicken
Wings
0
BL1
IC1
IC2
IC3
A
B
5. Consumer equilibrium
Consumer equilibrium is
reached at the point of
tangency between the
budget line and the
highest-attainable
indifference curve.
This combination
maximises total
satisfaction with a given
limited budget.
Sausages
Chicken
Wings
0
BL1
IC1
IC2
IC3
A
B