The Law of Equi-Marginal Utility
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...