1. LAW OF DIMINISHING MARGINAL UTILITY:
This law is based on one of the characteristics of the wants i.e., a particular want can be satiable. This law explains relationship between quantity of a commodity and its utility.
According to Prof. Marshall , " the additional benefit which a person derives from a given increase in the stock of a thing diminishes with every increase in the stock that he already has".
TABULAR REPRESENTATION:
UNITS OF COMMODITY MARGINAL UTILITY
1 50
2 40
3 30
4 20
5 10
MARGINAL UTILITY:
The additional utility obtained by consuming the additional unit is known as marginal utility.
2. LAW OF DEMAND:
The law of demand is given by Prof. Marshall. According to Prof. Marshall while other things being equal, " If the price increases, demand decreases, if the price falls demand increases".
TABULAR REPRESENTATION:
PRICE QUANTITY DEMAND
1 100
2 80
3 60
4 40
5 20
3. LAW OF SUPPLY:
The law of supply states that other things being equal ," The supply of a commodity extends with a rise in price and contrasts with a fall in price."
The law of supply simply explains the relationship between changes in price and changes in quantity supply. Moreover, it also shows a positive relationship between changes in price and changes in quantity supply.
4. EQUI - MARGINAL PRINCIPLE:
To maximize utility, consumers allocate their incomes among goods so as to equate the marginal utilities per rupee of the expenditure on the last unit of each good purchased. This is also referred to as the consumer equilibrium.
MU OF GAS / PRICE OF GAS = MU OF MOVIE / PRICE OF MOVIE = - - - - -MU OF X / P OF X
5. CONSUMER SURPLUS AND PRODUCER SURPLUS:
Consumer plus means difference between the price that consumer is willing to pay and consumer actually pays.
Producer surplus means difference between the price that producer is willing to sell and the price actually sold.
This law is based on one of the characteristics of the wants i.e., a particular want can be satiable. This law explains relationship between quantity of a commodity and its utility.
According to Prof. Marshall , " the additional benefit which a person derives from a given increase in the stock of a thing diminishes with every increase in the stock that he already has".
TABULAR REPRESENTATION:
UNITS OF COMMODITY MARGINAL UTILITY
1 50
2 40
3 30
4 20
5 10
MARGINAL UTILITY:
The additional utility obtained by consuming the additional unit is known as marginal utility.
2. LAW OF DEMAND:
The law of demand is given by Prof. Marshall. According to Prof. Marshall while other things being equal, " If the price increases, demand decreases, if the price falls demand increases".
TABULAR REPRESENTATION:
PRICE QUANTITY DEMAND
1 100
2 80
3 60
4 40
5 20
3. LAW OF SUPPLY:
The law of supply states that other things being equal ," The supply of a commodity extends with a rise in price and contrasts with a fall in price."
The law of supply simply explains the relationship between changes in price and changes in quantity supply. Moreover, it also shows a positive relationship between changes in price and changes in quantity supply.
4. EQUI - MARGINAL PRINCIPLE:
To maximize utility, consumers allocate their incomes among goods so as to equate the marginal utilities per rupee of the expenditure on the last unit of each good purchased. This is also referred to as the consumer equilibrium.
MU OF GAS / PRICE OF GAS = MU OF MOVIE / PRICE OF MOVIE = - - - - -MU OF X / P OF X
5. CONSUMER SURPLUS AND PRODUCER SURPLUS:
Consumer plus means difference between the price that consumer is willing to pay and consumer actually pays.
Producer surplus means difference between the price that producer is willing to sell and the price actually sold.
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