GS PrelimsEconomyMicroeconomics1998

A consumer is said to be in equilibrium, if

A

he is able to fulfil his need with a given level of income

B

he is able to live in full comforts with a given level of income

C

he can fulfil his needs without consumption of certain items

D

he is able to locate new sources of income

Correct Answer: Option A

Explanation

1. The question asks for the condition under which a consumer is said to be in equilibrium. 2. In microeconomics, consumer equilibrium refers to a state where the consumer derives maximum satisfaction from their expenditure, given their income and the prices of goods and services. 3. This means the consumer allocates their budget in such a way that they cannot increase their total utility by shifting expenditure from one good to another. 4. Option (A) states the consumer is able to fulfil his need with a given level of income. This aligns with the concept of maximizing satisfaction within budget constraints. 5. Option (B) 'full comforts' is subjective and not the technical definition. Option (C) 'without consumption of certain items' contradicts maximizing satisfaction. Option (D) 'locate new sources of income' is about changing constraints, not equilibrium within existing ones. 6. Therefore, being able to fulfil needs (maximize utility) within the given level of income represents consumer equilibrium.

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