Consumer Equilibrium:  

A rational, maximizing consumer would prefer to be on the highest possible indifference curve given their budget constraint. This point occurs where the indifference curve touches (is tangential to) the budget line. Indifference analysis can be used to analyze how a consumer would change the combination of two goods for a given change in their income or the price of the good. The total utility gained from a given budget will be maximized where the budget is all spent and marginal utility per dollar spent is equalized across all goods

The rule for a utility maximum is that:

MUx/Px = MUy/Py or

MUx/MUy = Px/Py

In the ordinal utility context maximizing utility means choosing that bundle of goods that is on the highest indifference curve achievable with given income and prices. Consumer equilibrium is achieved where the Budget line and indifference curve are tangent, that is, on budget line and highest indifference curve. This is the point at which MRS=Px/Py

If we assume that the good is normal, then the increase in price will result in a fall in the quantity demanded. This is for two reasons; the income effect (have a limited budget, therefore can purchase lower quantities of the good) and the substitution effect (swap with alternative goods that are cheaper).

The decrease in the quantity demanded can be divided into two effects;

The substitution effect -The substitution effect is when the consumer switches consumption patterns due to the price change alone but remains on the same indifference curve..

The income effect -The income effect highlights how consumption will change due to the consumer having a change in purchasing power as a result of the price change.

Therefore, in the case of a normal good, the income and substitution effects work to reinforce each other.