Write short note on:Equi-marginal utility

1.	Write short note on:Equi-marginal utility
Answer» Equi-marginal utility implies that a consumer allocates his expenditure on various commodities in such a manner that the utility derived from each additional unit of the rupee spent on each of the commodities is equal. Algebraically, this is represented by the following equation: \(\frac{MU_x}{P_x}=\frac{MU_y}{P_y}=...\frac{MU_n}{P_n}=MU_m\) Where MUx, MUy, MUn are the marginal utilities derived from the goods X, Y and N, respectively; P_x, P_y, P_n are the prices of the goods X, Y and N, respectively; and MUm is the marginal utility of money.

Answer»

Equi-marginal utility implies that a consumer allocates his expenditure on various commodities in such a manner that the utility derived from each additional unit of the rupee spent on each of the commodities is equal. Algebraically, this is represented by the following equation:

\(\frac{MU_x}{P_x}=\frac{MU_y}{P_y}=...\frac{MU_n}{P_n}=MU_m\)

Where MUx, MUy, MUn are the marginal utilities derived from the goods X, Y and N, respectively; P_x, P_y, P_n are the prices of the goods X, Y and N, respectively; and MUm is the marginal utility of money.

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