8.

Explain the condition of consumer’s equilibrium with the help of utility analysis. 

Consumer’s Equilibrium in case of Single Commodity:
The Law of Diminishing marginal utility can be used to explain consumer’s equilibrium in case of a single commodity.
A consumer purchasing a single commodity will be at equilibrium, when he is buying such a quantity of that commodity, which gives him maximum satisfaction. The number of units to be consumed of the given commodity by a consumer depends on 2 factors:
1. Price of the given commodity;
2. Expected utility (Marginal utility) from each successive unit.
To determine the equilibrium point, consumer compares the price (or cost) of the given commodity with its utility (satisfaction or benefit). Being a rational consumer, he will be at equilibrium when marginal utility is equal to price paid for the commodity.
Hence the consumer attains equilibrium when, Marginal Utility of a Rupee spent on the commodity = Marginal Utility of Money