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Old Tuesday, February 21, 2017
Subhan Ahmad Subhan Ahmad is offline
Join Date: Jul 2013
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kindly discuss this further with me. I will be appearing for CE-2018 Insha Allah. I think if we develop preference map (indifference map) that contains many ICs. We can show that by non-satiation assumption, the consumer will always prefer the IC that is away from the origin. So the budget line that is tangent to the IC will be the one the consumer prefers and can afford to meet that level of utility. The IC below the budget line will not be preferred due to non-satiation and the IC above the budget line is not affordable. Hence we get our consumer optimum.

With the above approach, we don't have to go to the cardinal approach that requires the marginal utility per unit currency of all bundles to be equal to achieve consumer optimum.

I am just curious to discuss this because I just finished preparing consumer theory chapter from two books. :P

Your evaluation of my understanding will be very helpful. Thank You
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