IMPORTANCE OR BENEFITS OF THE LAW OF EQUI-MARGINAL UTILITY Law of Equi-Marginal Utility has an important place in economics. Even though it is highly criticized, its importance cannot be ignored. This applies in the every field of economics, which is clear from the following Advertisements
CRITICISMS, LIMITATIONS OR EXCEPTIONS OF LAW OF EQUI-MARGINAL UTILITY Following are the main reasons for the criticism of the Law of Equi-marginal utility by H. H. Gossen. Although, it is a basic law of economics and consumers knowingly or unknowingly are compelled, to follow this law. This law is applicable in every field of economic analysis.
How is Law of “Equi-marginal utility” helpful in maximizing the utility of a consumer? INTRODUCTION OF LAW OF EQUI-MARGINAL UTILITY We know that wants of every man are unlimited. Wants arise again and again but man has limited means (income) to fulfill his wants and means have , alternative uses. Thus, man always face problem of distribution of limited means of alternative uses, on his wants; so that, he may get maximum satisfaction (or utility). Law of Equi-Marginal Utility presents…
Measurement of Utility Utility is a Psychological and Personal Concept. There is a deference of opinion, whether measurement of utility can be done or not. Followings are the two approaches are prevalent in this regard.
Definition At a given time the overall utility derived from the consumption of all units of a commodity is called Total Utility.
Definition of Marginal Utility Marginal Utility is the utility which is derived from the consumption of an additional unit of a commodity. In other words, it is the addition to total utility, resulting from adding one unit to the consumption of a commodity. Example : Ram consumes 6 ice creams at a time. In this case, 6 ice creams will be the marginal unit and marginal utility derived by him from adding one unit to the consumption of a commodity.
Meaning of Utility Utility means the power that satisfies any want. It is such an internal quality; which is found in all commodities desired by a person. The quality (power or capability) of commodity which satisfies the human want; directly or indirectly is called Utility. Those commodities, which have wants satisfying power are called ‘Useful Commodities‘.
Difference Between Micro and Macro Economics Micro and Macro economics, both are absolutely vital and a person is only half educated it he understand the one, while being ignorant of the other.
Meaning of Macro Economics The word macro means big. Thus, in Macro Economics, either the whole economy is studied or those big units which are related to the economy as a whole. Definition In the words of Prof. Boulding Macro Economics deals not with individual quantities as such but aggregates of these quantities, not with individual incomes but national income, not with individual output but with national output. Thus, macro economics studies the various groups related to the whole economy, like,…
Introduction to Micro Economics In the present times, the study of economics is done from two viewpoints namely Micro and Macro. From the first viewpoint, the economic problems of various units, like – individuals, families, firms etc. are studied individually, whereas; from the second viewpoint, the same units of persons, families, firms etc., are studied in a combined form. Micro Economics is concerned with a specific, particular or an individual whereas; Macro Economics is concerned with a group. Meaning The word…