Question

The Law of Equi-Marginal Utility, also known as the Law of Substitution, explains how a rational consumer allocates a limited income across multiple commodities. According to this law, a consumer reaches equilibrium when which condition is satisfied?

Q: Answer-The Law of Equi-Marginal Utility, also known as the Law of Substitution, explains how a rational con...

The Law of Equi-Marginal Utility states that a consumer maximises satisfaction by allocating expenditure such that the marginal utility derived from the last rupee spent on each commodity is equal, not by spending equal amounts or seeking equal total utility.