LAW OF EQUI- MARGINAL UTILITY:
-------------------------------

A consumer has given money which he has to spend on various goods he wants. Now, the question is how he allocates his money among various goods to get maximum utility or satisfaction. This explains Consumer`s Equilibrium.

The consumer`s behaviour is generally governed by two factors :
---------------------------------------------------------------

(1) The marginal utility of the goods and
(2) The prices of goods.

The Law of Equi-marginal Utility states that “the consumer will allocate his money among the various goods in such a way that the marginal utility of money spent on each goods is equal.”

Suppose, there are two goods Tomato (X) and Brinjal (Y) on which a consumer wants to spend given money. Price of tomato is Px while price of brinjal is Py.


Example: A consumer has `140 with him which he wants to spend on Brinjal (X) and Tomato (Y). The Marginal Utility of Brinjal and Tomato is given below. The price of Brinjal and Tomato is `20/kg and `30/kg respectively. How much quantity of Brinjal and Tomato he should buy to maximize his satisfaction?





compare MUMx with MUMy.