The Parents’ Consumer Equilibrium while purchasing two kids’ app simultaneously Introduction: Consumer equilibrium - It is the highest level of satisfaction with an affordable amount of goods and services that can be attained by a consumer at the current prices such that he exhausts his income. Thus, is an equilibrium of his ability and willingness to pay. The equilibrium can be stated as: M U X P X = M U Y P Y = ....... M U n P N = M U M Marginal Rate of Substitution (MRS) - In case of a two good decision model of a consumer with a given income, the number of units of one good, X, that have to be sacrificed to get an additional unit of another good, Y to maintain the same level of utility. It is the slope of an indifference curve yielding the same level of utility at all combinations of X and Y on it. Budget Line - The budget line is the locus of points or combination of X and Y that a consumer can consume given his income. It shows that his income is exhausted at all points on the budget line, any point above it is not affordable and those below it are sub-optimum as they leave a portion of the income unexhausted.

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Chapter 20, Problem 1CTQ

To determine

The Parents’ Consumer Equilibrium while purchasing two kids’ app simultaneously

Introduction:

Consumer equilibrium- It is the highest level of satisfaction with an affordable amount of goods and services that can be attained by a consumer at the current prices such that he exhausts his income. Thus, is an equilibrium of his ability and willingness to pay. The equilibrium can be stated as:

MUXPX=MUYPY=.......MUnPN=MUM

Marginal Rate of Substitution (MRS) - In case of a two good decision model of a consumer with a given income, the number of units of one good, X, that have to be sacrificed to get an additional unit of another good, Y to maintain the same level of utility. It is the slope of an indifference curve yielding the same level of utility at all combinations of X and Y on it.

Budget Line- The budget line is the locus of points or combination of X and Y that a consumer can consume given his income. It shows that his income is exhausted at all points on the budget line, any point above it is not affordable and those below it are sub-optimum as they leave a portion of the income unexhausted.

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