law of equi marginal utility

Different Laws that emerges out from the Utility?

1. Law of Diminishing Marginal Utility (for 1 product)

As a person keeps on using the extra unit of product. The additional benefit that is going to derive is kept on decreasing.

2. Principle of Equi-Marginal Utility (for multiple products) or Law of Substitution

The level of satisfaction should be equal to the price of the product. We will consume till then only.

Possible combination to buy – (9,9),(8,8),(7,7),(6,6),(5,5),(4,4),(3,3)

Marginal utility of Money is used to choose the combination.

Formula for Calculating Marginal Utility

Share this :

Leave a Reply

Your email address will not be published. Required fields are marked *