{"id":3571,"date":"2020-02-23T11:31:13","date_gmt":"2020-02-23T11:31:13","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3571"},"modified":"2020-02-23T11:31:13","modified_gmt":"2020-02-23T11:31:13","slug":"law-of-equi-marginal-utility","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/","title":{"rendered":"LAW OF EQUI MARGINAL UTILITY"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/#LAW_OF_EQUI_MARGINAL_UTILITY\" title=\"LAW OF EQUI MARGINAL UTILITY\">LAW OF EQUI MARGINAL UTILITY<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/#ASSUMPTIONS_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\" title=\"ASSUMPTIONS\nOF THE LAW OF EQUI MARGINAL UTILITY\">ASSUMPTIONS\nOF THE LAW OF EQUI MARGINAL UTILITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/#EXPLANATION_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\" title=\"EXPLANATION OF THE LAW OF EQUI MARGINAL UTILITY\">EXPLANATION OF THE LAW OF EQUI MARGINAL UTILITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/#IMPORTANCE_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\" title=\"IMPORTANCE OF THE LAW OF EQUI MARGINAL UTILITY\">IMPORTANCE OF THE LAW OF EQUI MARGINAL UTILITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/#CRITICISMS_LIMITATIONS_OF_THE_LAW_OF_EQUIMARGINAL_UTILITY\" title=\"CRITICISMS \/LIMITATIONS OF THE LAW OF\nEQUIMARGINAL UTILITY\">CRITICISMS \/LIMITATIONS OF THE LAW OF\nEQUIMARGINAL UTILITY<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"law-of-equi-marginal-utility\"><span class=\"ez-toc-section\" id=\"LAW_OF_EQUI_MARGINAL_UTILITY\"><\/span><strong>LAW OF EQUI MARGINAL UTILITY <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The&nbsp;Law of Equi Marginal <a href=\"https:\/\/commerceiets.com\/utility-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Utility&nbsp; (opens in a new tab)\">Utility&nbsp;<\/a>was presented in 19th century by an economists H. H. Gossen. This is known as Gossen\u2019s Second law of consumption.<\/p>\n\n\n\n<p>This law is\nbased on the principle of obtaining maximum satisfaction from a limited income.\nIt explains the behavior of a consumer when he consumes more than one\ncommodity.<\/p>\n\n\n\n<p>The law states that a consumer should spend his limited\nincome on different commodities in such a way that the last rupee spent on each\ncommodity yield him equal marginal utility in order to get maximum\nsatisfaction.<\/p>\n\n\n\n<p><strong>ACCORDING TO PROF. HH GOSSEN<\/strong><\/p>\n\n\n\n<p>\u201cIf\nit is not possible to gratify all wants to the point of satisfaction, it is\nnecessary in order to obtain maximum satisfaction, to discontinue the\nsatisfaction of different wants at the point at which their intensity has\nbecome equal.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. ALFRED MARSHALL<\/strong><\/p>\n\n\n\n<p>\u201cIf\na person has a thing which can be put to several uses, he will distribute it\namong these in such a way that it has the same marginal utility in all. For, if\nit has a greater marginal utility in one use than another, he would gain by\ntaking some of it from second use and applying it to the first.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. J.K. MEHTA <\/strong><\/p>\n\n\n\n<p>\u201cIf\na commodity can satisfy many wants within a given period of time, then in order\nto get greatest satisfaction from a given quantity of it, its amount should be\nso distributed between various wants as to make its marginal utility with\nreference to given period of time as nearly equal in all cases as possible.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. J.M. JOSHI <\/strong><\/p>\n\n\n\n<p>\u201cIn\ncase of a single commodity, which can be put to several uses, the consumer will\ndistribute it among these uses in such a way that it has the same marginal\nutility in all, only then his total utility will be maximum.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. LIPSEY AND PROF. STEING<\/strong><\/p>\n\n\n\n<p>\u201cThe\nhousehold maximizing its utility will allocate its expenditure between\ncommodities so that the utility of the last dollar spent on each is equal.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. J.R. HICKS <\/strong><\/p>\n\n\n\n<p>\u201cUtility\nwill be maximized when the marginal units of expenditure in each direction\nbring in the same increment of utility.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING\nTO PROF. SAMUELSON<\/strong><\/p>\n\n\n\n<p>\u201cIf\nthe consumer has arranged his consumption so that every single good is bringing\nhis marginal utility just exactly proportional to its price, then he would be\nassured that he could not better himself by departing from such equilibrium.\u201d<\/p>\n\n\n\n<p>This law is also\nknown as the Law of substitution or the Law of Maxi\u00admum Satisfaction.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"assumptions-of-the-law-of-equi-marginal-utility\"><span class=\"ez-toc-section\" id=\"ASSUMPTIONS_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\"><\/span><strong>ASSUMPTIONS\nOF THE LAW OF EQUI MARGINAL UTILITY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As\npointed out by Professor Alfred Marshall, the law of equi\u00ad-marginal utility\noperates only when other things being equal. These other things are assumptions\nof the law. They are discussed below:<\/p>\n\n\n\n<p><strong>(1) Rationality of the\nConsumer:<\/strong><\/p>\n\n\n\n<p>The law is based on the\nassumption that all the consumers are rational human beings and they spend\ntheir given income in such a way that maximisation of satisfaction goal is\nattained by them.<\/p>\n\n\n\n<p><strong>(2) Utility is Measurable:<\/strong><\/p>\n\n\n\n<p>The law is based on the\nassumption that cardinal measurement of utility is possible and the measuring\nrod of utility is money which takes into consideration the sacrifice in terms\nof money and the satisfaction in terms of cardinal number of utility.<\/p>\n\n\n\n<p><strong>(3) Constant Marginal Utility of Money:<\/strong><\/p>\n\n\n\n<p>The law assumes that the marginal\nutility of money remains constant or it does not change during the process of\nspending by the consumers.<\/p>\n\n\n\n<p><strong>(4) Operation of the Law of Diminishing\nMarginal Utility:<\/strong><\/p>\n\n\n\n<p>The law of equi-marginal utility\nis based on the law of diminishing marginal utility and it assumes that the law\nholds good when various units of different commodities are consumed by the\nconsumer.<\/p>\n\n\n\n<p><strong>(5) Taste, Preference, Fashion and Income of\nConsumer do not Change:<\/strong><\/p>\n\n\n\n<p>The law is based on the\nassumption that the income, taste, preference, fashion of the consumer do not\nchange. During the course of consumption they are assumed as constant.<\/p>\n\n\n\n<p><strong>(6) No Change in the Prices of Related Goods:<\/strong><\/p>\n\n\n\n<p>The law is based on the\nassumption that the prices of related goods like substitutes and\ncomplementaries do not change during the process of consumption. If these\nvariables change the law will not operate.<\/p>\n\n\n\n<p><strong>(7) Divisibility of Goods:<\/strong><\/p>\n\n\n\n<p>The law operates on the\nassumption that the goods under consumption are divisible. They can be divided\ninto small pieces and purchased by the small units of money.<\/p>\n\n\n\n<p><strong>(8)<\/strong>&nbsp;The\nperiod of income and expenditure of the consumers is the same.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"explanation-of-the-law-of-equi-marginal-utility\"><span class=\"ez-toc-section\" id=\"EXPLANATION_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\"><\/span><strong>EXPLANATION OF THE <strong>LAW OF EQUI MARGINAL UTILITY <\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Each\nconsumer aims at maximization of his satisfaction while spending his given\nincome which has alternative uses on various goods and services, namely, food,\nclothing, shelter, education, sanitation and health. He arranges his wants in\norder of intensity and the order of satisfaction is arranged on the basis of\nintensity of these wants and goes on satisfying his wants till the marginal\nutility of all the goods is equalized in proportion to money spent on them.<\/p>\n\n\n\n<p>In this manner he can maximize\nhis satisfaction. He will substitute that commodity which has more utility in\nplace of less marginal utility and he continues up to that point where the\nmarginal utility from all goods is equalised.<\/p>\n\n\n\n<p>The operation of the law can be\nunderstood with the example. We assume that there are Rs. 9 with a consumer and\nhe has to allocate the amount on two commodities in such a way that in the end\nthe marginal utility of two goods are equalized.<\/p>\n\n\n\n<p><strong>It can be seen from the following table:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"503\" height=\"341\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-TABLE.png\" alt=\"LAW OF EQUI MARGINAL UTILITY \" class=\"wp-image-3574\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-TABLE.png 503w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-TABLE-300x203.png 300w\" sizes=\"(max-width: 503px) 100vw, 503px\" \/><figcaption><strong>LAW OF EQUI MARGINAL UTILITY <\/strong><\/figcaption><\/figure>\n\n\n\n<p>The\ntable reveals that the consumer has Rs. 9 which he can spend on the different\ncommodities, namely, A and B. We also assume that the each unit of a commodity\nhas the price of Re. 1. The various units of two commodities have been shown\nwhich gives him different marginal utilities. The MU of A and B are decreasing.\nHe can maximise his satisfaction when he spends Rs. 5 on commodity A and Rs. 4\non commodity B.<\/p>\n\n\n\n<p>His total utility is 32+28+24+20+16 of A and 28+24+20+16 of B which is 208 units. He cannot attain more utility by spending his given income in different way. The table can be shown in the form of diagram.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"450\" height=\"302\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-CURVE.png\" alt=\"\" class=\"wp-image-3575\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-CURVE.png 450w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/EMU-FINAL-CURVE-300x201.png 300w\" sizes=\"(max-width: 450px) 100vw, 450px\" \/><figcaption><strong>LAW OF EQUI MARGINAL UTILITY <\/strong><\/figcaption><\/figure>\n\n\n\n<p>The diagram shows that Rs. 5 have\nbeen spent on commodity A and Rs. 4 on commodity B. The bars are showing the\nmarginal utility from different units of the commodities which are declining\nshowing the applicability of the law of diminishing marginal utility. The last\nutility from the 9th and the 8th unit of money equalise the utility which is\nshown by equi-MU line where MUA is equal MUB (MU<sub>A&nbsp;<\/sub>= MU<sub>B<\/sub>) in the diagram. Thus, the consumer attains his\nobjective.<\/p>\n\n\n\n<p><strong>The\ncondition for a consumer to maximize utility is usually written in the\nfollowing form:<\/strong><\/p>\n\n\n\n<p>MU<sub>X<\/sub>\/P<sub>X<\/sub>&nbsp;= MU<sub>Y<\/sub>\/P<sub>Y<\/sub><\/p>\n\n\n\n<p>So long as MU<sub>Y<\/sub>\/P<sub>Y&nbsp;<\/sub>is higher\nthan MU<sub>X<\/sub>\/P<sub>X<\/sub>, the consumer\nwill go on substituting Y for X until the marginal utilities of both X and Y\nare equalized.<\/p>\n\n\n\n<p>The marginal\nutility per rupee spent is the marginal utility obtained from the last unit of\ngood consumed divided by the price of good (i.e., MU<sub>X<\/sub>\/P<sub>X<\/sub>&nbsp;or MU<sub>Y<\/sub>\/P<sub>Y<\/sub>). A consumer thus gets maximum utility from his limited\nincome when the marginal utility per rupee spent is equal for all goods.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"importance-of-the-law-of-equi-marginal-utility\"><span class=\"ez-toc-section\" id=\"IMPORTANCE_OF_THE_LAW_OF_EQUI_MARGINAL_UTILITY\"><\/span><strong>IMPORTANCE OF THE LAW OF EQUI MARGINAL UTILITY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The law of substitution is of\ngreat practical importance. Everybody has got limited income. Naturally he must\ntry to make the best use of it.<\/p>\n\n\n\n<p>This\ncan be done by the application of this law in the various aspects of economic\nlife as under:<\/p>\n\n\n\n<p><strong>(i)\nConsumption:<\/strong><\/p>\n\n\n\n<p>A wise consumer consciously acts on this law\nwhile arranging his expenditure. His expenditure is so distributed that the\nsame price measures equal utilities at the margin of different purchases. Every\nperson must try to spend his income in a manner which yields him the greatest\nsatisfaction. This he will be able to do only if he spends his money in such a\nmanner as to ob\u00adtain equal satisfaction from the marginal units of money spent\non the various commodities he purchases.<\/p>\n\n\n\n<p><strong>(ii)\nProduction:<\/strong><\/p>\n\n\n\n<p>The law is also of great\nimportance in production. The producer has to use several factors of\nproduction. He wants maximum net profit. For this purpose, he must substitute\none factor for another so as to have the most economical combination, for\nexample, he will substitute labour for machinery and vice versa, So that the\nmarginal utility or marginal productivity of the two is equalised in this\nmanner, he will get most economical combination of the \u2018actors of production at\nhis disposal to make maximum profit.<\/p>\n\n\n\n<p><strong>(iii)\nExchange:<\/strong><\/p>\n\n\n\n<p>The law also applies in exchange\nbecause exchange is nothing else but substitution of one thing for another.\nWhen we sell a commodity, say, sugar, we get money. With this money, we buy\nanother commodity, say, wheal. We have, therefore, really substituted sugar for\nwheat.<\/p>\n\n\n\n<p><strong>(iv)\nDistribution:<\/strong><\/p>\n\n\n\n<p>It is on the principle of\nmarginal productivity that the share of each factor of production (viz., land,\nlabour, capital, organisation) is determined. The use of each factor is pushed\nup to a point where its marginal product is equal to the marginal product of\nevery other factor, of course after allowing for the differences in their\nrespective remunerations. This necessitates substituting one factor for\nanother.<\/p>\n\n\n\n<p><strong>(v)\nPublic Finance:<\/strong><\/p>\n\n\n\n<p>The Government, too, is guided by\nthis law in public expenditure. The public revenues are so spent as to secure\nmaximum welfare for me community. The Government must cut down all wasteful\nexpenditure while the return is not proportionate and instead concentrate its\nresources on more productive or more beneficial expenditure.<\/p>\n\n\n\n<p><strong>(vi)\nInfluences Prices:<\/strong><\/p>\n\n\n\n<p>The law of\nsubstitution influences prices. When a commodity becomes scarce and its price\nsoars high, we substitute for it things which are less scarce. Its price,\ntherefore, comes down.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"criticisms-limitations-of-the-law-of-equimarginal-utility\"><span class=\"ez-toc-section\" id=\"CRITICISMS_LIMITATIONS_OF_THE_LAW_OF_EQUIMARGINAL_UTILITY\"><\/span><strong>CRITICISMS \/LIMITATIONS OF THE LAW OF\nEQUIMARGINAL UTILITY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Like other economic laws, the law\nof equimarginal utility too has certain limitations or exceptions. The following\nare the main exceptions:<\/p>\n\n\n\n<p><strong>IGNORANCE<\/strong><strong><\/strong><\/p>\n\n\n\n<p>If the consumer is ignorant or\nblindly follows custom or fashion, he will make a wrong use of money. On\naccount of his ignorance he may not know where the utility is greater and where\nless. Thus, ignorance may prevent him from making a rational use of money.\nHence, his satisfaction may not be the maximum, because the marginal utilities\nfrom his expenditure can\u00adnot be equalised due to ignorance.<\/p>\n\n\n\n<p><strong>INEFFICIENT ORGANISATION<\/strong><strong><\/strong><\/p>\n\n\n\n<p>In the same manner, an\nincompetent organ\u00adiser of business will fail to achieve the best results from\nthe units of land, labour and capital that he employs. This is so because he\nmay not be able to divert expenditure to more profitable channels from the less\nprofitable ones.<\/p>\n\n\n\n<p><strong>UNLIMITED\nRESOURCES<\/strong><strong><\/strong><\/p>\n\n\n\n<p>The law has obviously no place\nwhere this resources are unlimited, as for example, is the case with the free\ngifts of nature. In such cases, there is no need of diverting expenditure from\none direction to another.<\/p>\n\n\n\n<p><strong>HOLD OF CUSTOM AND FASHION<\/strong><strong><\/strong><\/p>\n\n\n\n<p>A consumer may be in the strong\nclutches of custom, or is inclined to be a slave of fashion. In that case, he\nwill not be able to derive maximum satisfaction out of his expenditure, because\nhe cannot give up the consumption of such commodities. This is specially true\nof the conventional necessaries like dress or when a man is addicted to some\ninto\u00adxicant.<\/p>\n\n\n\n<p><strong>FREQUENT\nCHANGES IN PRICES<\/strong><strong><\/strong><\/p>\n\n\n\n<p>Frequent changes in prices of\ndifferent goods render the observance of the law very difficult. The consumer\nmay not be able to make the necessary adjustments in his expenditure in a\nconstantly changing price situation.<\/p>\n\n\n\n<p><strong>INDIVISIBILITY\nOF GOODS<\/strong><\/p>\n\n\n\n<p>Prof. Boulding has said that for the\noperation of this law the goods must be of divisible nature but people in their\nnormal life consume such commodities which are of indivisible nature,\ntherefore, this rule may not apply. For example\u2014Use of Radio, Watch, Motor Car\netc.<\/p>\n\n\n\n<p><strong>DURABILITY\nOF GOODS<\/strong><\/p>\n\n\n\n<p>Consumption of some goods is for long period\nwhere it becomes difficult to find. Out its marginal utility. For example\u2014 Use\nof Refrigerator, Motor Cycle etc.<\/p>\n\n\n\n<p><strong>FIXED\nPROPORTION OF CONSUMPTION<\/strong><\/p>\n\n\n\n<p>Again, there are certain goods whose consump\u00adtion\nis fixed portion is possible. It cannot be either increased or decreased. For\nexample\u2014Consumption of milk, tea, bread or butter etc. Consumer can use these\ncommodities only up to proper quantity. Hence, this law cannot be active or can\noperate actively.<\/p>\n\n\n\n<p><strong>CONTROL\nOR RATIONING OF CONSUMPTION GOODS<\/strong><\/p>\n\n\n\n<p>Sometimes, government puts rationing or\ncontrol over the consumption of certain commodities, then in that case the\ndesire of the consumer is to use more goods but he cannot use it due to control\nor rationing.<\/p>\n\n\n\n<p><strong>CONSUMER\u2019S\nINDEFINITE BUDGET PERIOD<\/strong><\/p>\n\n\n\n<p>Majority of the consumer do not prepare their family budget they on meeting expense as per their requirements. In such cases it becomes difficult to know the activeness or the use of Equimarginal Utility.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/demand\/\">Theory of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-demand\/\">Law of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/demand-function\/\">Demand Function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/exceptions-of-law-of-demand\/\">Exceptions of law of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/elasticity-of-demand\/\">Elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/change-in-demand\/\">Change in demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/price-elasticity-of-demand\/\">Price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-law-of-demand-and-elasticity-of-demand\/\">Law of demand Vs Elasticity of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/factors-affecting-price-elasticity-of-demand\/\">Factors affecting price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/production-function\/\">Production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-short-run-long-run-production-function\/\">Short run vs long run production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-variable-proportions\/\">Law of variable proportions<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/types-of-demand\/\">Types of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/managerial-economics\/\">Managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/characteristics-of-managerial-economics\/\">Characteristics of managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-managerial-economics\/\">Scope of managerial economics<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/utility-analysis\/\">Utility analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-marginal-utility\/\">Law of diminishing marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/\">Law of equi marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium\/\">Consumers Equilibrium<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/indifference-curve-analysis\/\">Indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium-using-indifference-curve-analysis\/\">Consumer equilibrium using indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-tp-ap-and-mp\/\">Relationship between TP, AP and MP<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-increasing-returns\/\">Law of increasing returns<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-returns\/\">Law of diminishing returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-constant-returns\/\">Law of constant returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/returns-to-scale\/\">Returns to Scale<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/economies-and-diseconomies-of-scale\/\">Economies and diseconomies of scale<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/concept-of-costs\/\">Concept of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-ac-and-mc\/\">Relationship between AC and MC<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/traditional-theory-of-cost\/\">Traditional theory of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/modern-theory-of-cost\/\">Modern theory of costs<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explicit-vs-implicit-costs\/\">Explicit vs Implicit costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue\/\">Revenue<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-competition\/\">Perfect competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-meaning\/\">Monopoly<\/a>&nbsp;<\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/price-discrimination\/\">Price discrimination<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-perfect-competition-and-monopoly\/\">Difference between perfect competition and monopoly<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-and-monopolistic-competition\/\">Perfect Vs Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-and-monopolistic-competition\/\">Monopoly and monopolistic competition<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/product-differentiation-strategy\/\">Product differentiation strategy<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopolistic-competition\/\">Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/national-income-in-india\/\">National Income in India<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/measurement-of-national-income\/\">Measurement of national income in India<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/consumption-function\/\">Consumption function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/keynesian-psychological-law-of-consumption\/\">Keynes Psychological law of consumption<\/a><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"266\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg\" alt=\"LAW OF EQUI MARGINAL UTILITY \" class=\"wp-image-787\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg 1024w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-300x78.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-768x199.jpg 768w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1536x398.jpg 1536w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>LAW OF EQUI MARGINAL UTILITY <\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>LAW OF EQUI MARGINAL UTILITY The&nbsp;Law of Equi Marginal Utility&nbsp;was presented in 19th century by an economists H. H. Gossen. This is known as Gossen\u2019s Second law of consumption. This law is based on the principle of obtaining maximum satisfaction from a limited income. It explains the behavior of a consumer when he consumes more&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;LAW OF EQUI MARGINAL UTILITY&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3572,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[113,92],"tags":[],"class_list":["post-3571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-managerial-economics","category-micro-economics"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3571"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3571"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3571\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3572"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}