This law is based on the principle of obtaining maximum satisfaction from a limited income. Suppose we have data for the marginal and the total utility for different units of ice creams. Getting two copies of the same novel is one of the examples of zero marginal utility. It is zero when the consumption of an additional unit of a product results in no change in the total utility. Taking more vitamin supplements or overtake of some medicine is its example. It is negative when the consumption of an additional unit of a product results in the decrease in the total utility.
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Getting a coupon of free hair spa is its example. The marginal utility is positive when the consumption of an additional unit of a product results in the increase in the total utility. Consumer’s income is fixed and limited.īased on the relationship between the total and the Marginal Utility, there are three types of marginal utility.Tastes, fashion, preferences, and priorities remain unchanged.No time gap between the consumption of the different units.Assumptions of Law of Equi-Marginal Utility It states that as consumption increases more and more, the marginal utility will be less and less. This law explains the relation between utility and quantity of a commodity. So as the unit of the same item goes on increasing, the marginal utility goes on diminishing. Moreover, you start to feel a little sick. If you go for another one, is the feeling the same? No. How will you feel? Happy, Right? Suppose you eat another bar. It decreases with each additional increase in the consumption of a good. It is the approximate change in the total utility resulting from a one-unit change in the consumption of the commodity. In simple words, it is the additional satisfaction gained by the consumption of one more unit of a commodity. The concept of saving money and proper utilization of capital is the basis of marginal utility and the law of equal-marginal utility. Which option will you choose? Surely you will go for public transport. The fare of the cab is double of that of the government bus. Which option will you choose? You have limited money. For that, you have to take either a cab or any other public transport.
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How will you react if you get the same food to eat, over and over? Will you be happy? No! How will you feel if you see the same movie again and again? Bored!! Right?
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