| Feature | Utility Approach | Indifference Curve Approach | | :--- | :--- | :--- | | | Cardinal (utils) | Ordinal (ranking) | | Assumption | MU diminishes | MRS diminishes | | Tools | MU, TU | IC, Budget Line | | Equality condition | ( MU_x/P_x = MU_y/P_y ) | ( MRS_xy = P_x/P_y ) | | Income effect | Assumes constant MU of money | Handles income effect via budget shifts |

| Feature | Utility Analysis (Cardinal) | Indifference Curve Analysis (Ordinal) | | :--- | :--- | :--- | | | Utility is measured in 'utils'. | Utility is ranked (preference order). | | Main Tool | Total and Marginal Utility curves. | Indifference Curves and Budget Line. | | Equilibrium Condition | $MU_x / P_x = MU_y / P_y = MU_m$ | $MRS_xy = P_x / P_y$ | | Assumption | Constant MU of money. | Diminishing MRS. |

To grasp consumer equilibrium, you must first understand , which is the want-satisfying power of a commodity. It is measured in imaginary units called Utils .

The slope of IC (Marginal Rate of Substitution) equals the slope of the Budget Line (Price Ratio).

There are two primary ways to analyze consumer behavior and equilibrium: