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Question
The law of equi-marginal utility is based on the law of _________.
Options
(a) demand
(b) diminishing marginal utility
(c) supply
(d) consumption
Solution
The law of equi-marginal is based on the law of diminishing marginal utility.
Explanation:
The law of equi-marginal utility is an extension of the law of diminishing marginal utility, It explains how equilibrium is achieved when a consumer spends his income on number of goods to derive maximum satisfaction.
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