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A consumer buys/consumes a product only if marginal utility derived from it is more than marginal utility of money. As he continues consuming the marginal utility derived from every additional unit goes on diminishing but marginal utility of money remains constant. Both utilities match at a place i.e; where marginal utility of product becomes equal to marginal utility of money the consumer stops consumption thus equilibrium is struck.
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Consumer equlibrium with the help of law of dimnishing marginal utility?
types of equilibrium in consumer theory
Why does the marginal rate of substitution diminish?
As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumption of a good decreases, its marginal utility goes on increasing.
What is ordinal approach to the theory of consumer behavior?
ordinal approach to the theory of consumer behaviour is consumer's ability to rank his preference for various combination of products. It uses Indifference curve to analyse these preferences.
Criticism of law of diminishing marginal utility?
the criticisma of the law of diminishing marginal utility
Why law of diminishing returns is considered a short-run phenomenon?
why law of diminishing returns is considered a short-run phenomenon?
What the law of equalising weighted marginal utilities mean?
This is the law that represents the consumer equilibrium when they have more than one of a product. The customer will slowly want the item less the more of it they get.
Explain the merits and demerits of law of diminishing marginal utility?
explain the demerits of diminishing marginal utility
What is law of dmu?
the term "law of DMU" comes from economics. DMU stands for dinimishing marginal utility. the law of diminishing marginal utility states that beyond a certain quantity, addtional units of a specific good will yield declining amount of extra satisfaction to a consumer.
Who is responsible for the law diminishing returns?
Thomas Malthus
Who is responsible for the law of diminishing returns?
Thomas Malthus
Why isoquants convex to the origin?
law of diminishing returns
What offsets the law diminishing returns?
technical innovation
