Learn Economics by Dr. Swati Gupta

The Law of Equi-Marginal Utility Th is law explain s the consumer's equilibrium in a multi-commodity model. This law was first mentioned by H.H.Gossen, that is why it is called Gossen's second law. Further, this law was refined by Alfred Marshall. It is also known as the law of ''Maximum Satisfaction" or the law of substitution. This law states that a consumer consumes various goods in such a way that the marginal utility derived per unit of expenditure on each good is the same. According to Marshall, " If a person has a thing which can be put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all . " There are limited resources to fulfill unlimited wants. Every consumer wants maximum satisfaction with the minimum income. For this purpose, he substitutes the more useful for the less useful thing. He spends his income in such a manner that marginal utility in each direction of his purchases has be...

UTILITY ANALYSIS What is utility:  The quality of a good or service, which satisfies human wants, is called utility. The utility is the ability to satisfy human wants. Example : If a person is thirsty and he drinks water to quench his thirst, it means that water has the quality to satisfy his thirst. This quality of water is called utility. Characteristics / Features of Utility: Utility is not equated with usefulness : A  good that might have the capacity to satisfy a particular want but it might not be useful for a consumer, such as alcohol provides utility for the liquor but it is harmful.  Utility is a psychological concept:  It means that the satisfaction obtained from the consumption of a good or service, depends on the mental aspect of the person.  Utility is always individual and relative: U tility differs from person to person. A different person will get different utility or satisfaction from the same commodity.  Even it  varies in diffe...