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6. Theory of Consumer Demand: Cardinal U... > Derivation of Demand Curve

DERIVATION OF DEMAND CURVE

The basic purpose of the analysis of consumer behaviour is to derive a consumer demand curve. We now turn, in this section, to derive the demand curve following the cardinal utility approach. For the derivation of the demand curve, we consider a single-commodity (X) case. According to cardinal utility approach, as stated above, a consumer reaches his equilibrium where MUx = Px. This logic of consumer's equilibrium provides a convenient basis for the derivation of individual demand curve for a commodity. Marshall3 was the first economist to explicitly derive the demand curve from consumer's equilibrium condition for a single commodity, say X, as MUx = Px. This equilibrium condition is used to derive consumer's demand curve for commodity X as shown in Figure 6.3(a).


  

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