The interest of the consumer is to purchase those goods and services which provides him maximum satisfaction. So the consumer chooses the best bundle available to him. The consumer always prefers to have bundles on the higher indifference curve. The preference of the consumer to have the bundle, which provides him maximum satisfaction, is known as consumer’s equilibrium. It is the optimum point, a point of maximum satisfaction. The equilibrium of the consumers is possible only when the budget line is tangent to the indifference curve. The consumer purchases the goods and services on the budget line, which provides him maximum satisfaction. It is possible only when the slope of the budget line \(\frac{P_1}{P_2}\) and the slope of the indifference curve (MRS) are equal.
