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This theory is propounded by H.H Gossen and called second law of Gossen. It was developed by Alfered Marshall and all the credits are given to Alfred Maeshall.
This theory states that a rational consumer spent his total budget between or among the goods he will derived marginal utility from the last money purchased of goods.
This theory states that a rational consumer spent his total budget between or among the goods he will derived marginal utility from the last money purchased of goods.
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In economics it is known as law of Equi-marginal Utility. It basically shows the behavior of a consumer in allocating his limited earnings among different goods and services. In short this law tells that how a consumer distributes his earnings between set of goods so as to get maximum satisfaction.
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i think this is not good answer please write more.
Hi buddy.. Sorry for less information. I think you asked for the concept so i have given it.. you should be specific about what you are looking for.. I just edited my answer just check out the website i just mentioned in my link hope that will help you.
The Principle of euqmarginal utility states that a rational consumer will always try to maximise his satisfaction by buying a combination of two or more goods which give him maximum marginal utility per dollar for each good, until the budget is used up completely.
Mathematically, it means:
MU of good A/ Price of A = MU of good B/ Price of B
In any case when the Marginal Utilities of the goods A and B are unequal, the consumer will purchase a combination that will give him highest Marginal Utility per dollar value of each good, in such a way that the entire budget amount is spent.
Mathematically, it means:
MU of good A/ Price of A = MU of good B/ Price of B
In any case when the Marginal Utilities of the goods A and B are unequal, the consumer will purchase a combination that will give him highest Marginal Utility per dollar value of each good, in such a way that the entire budget amount is spent.
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answered 9 months ago
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