Equi-Marginal Principle:
This principle is also know as the law of Equi marginal
utility or Rational spending
In this principle we can the consumer allocate the income
among the goods so as to equate the marginal utility per rupee so as to have
maximum utility
The expenses on the last unit of each good is calculated by
marginal unit upon price
Ratio of mu for last unit rupee spend is equal =mu/p
Example :
As we in our real life the price for rice
is low in south india than wheat as it is
available plenty in number in
south india but when we see in north
india the prices of rice is more than
wheat
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