Question

The law of equi-marginal utility is based on certain assumptions.

Answer 1

Yes, I do agree with the statement because that the law of equi marginal utility is based on assumption as following are the assumption to this law.

Assumptions:

• It is assumed that cardinal measurement of utility is possible.
• It is assumed that comparison of utility is possible.
• The behaviours of consumer is rational and his aim is to get maximum utility.
• Prices of commodities are given and remain constant.
• A consumer has limited amount of income to spend.
• Taste, habits and preferences of a consumer remain same.
• Consumer consumes two commodities at a time.
• Consumer spends his entire income on the two commodities.
• Marginal Utility of money remains constants.
• Units of commodities are of standard size.
• Commodities are divisible according to requirement.