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Consumer Equilibrium
To demonstrate the consumer's equilibrium i.e. the point at which the consumer maximizes utility with a given budget, we need to combine the indifference map and the budget line.
The consumer obtains maximum utility from a budget of AF by choosing the combination of X and Y represented by C, where the marginal rate of substitution is equal to the relative prices of X and Y.
Goals of the firm How much is produced by a firm depends on its objectives. A firm which aims to maximise its sales revenue, for example, will generally supply a greater quant
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