...

IQRA


The concept is popularized by Dr. Alfred Marshall in 1980
Economics
Meaning and Definition
It also means the want satisfying power of a commodity. E.g. water has utility
Features
1. Utility is Subjective term:
gives different u
child and no utility to an adult
2. Utility is relative term:
same commodity gives different utility at different place
more utility in Kashmir as compare to Mumbai.
3. Utility has no ethical significance:
whether moral or immoral has Utility. E.g
people
4. Utility depends on intensity of wants
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
utility from the water.
5. Utility is different from pleasure :
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
6. Utility is multipurpose:
E.g. coal, electricity, water etc.
7. Utility is not same as satisfaction:
satisfaction is derived after the consumption.
8. Utility can not be measure
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
a cardinal measurement of utility.
Types of Utility
1. Form Utility
commodity it is called as
wood.
2. Time Utility
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
season.
3. Place Utility
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
Kashmir than in Mumbai.
IQRA COMMERCE
The concept is popularized by Dr. Alfred Marshall in 1980
Economics.
Meaning and Definition
It also means the want satisfying power of a commodity. E.g. water has utility
Features / Characteristics of Utility:
Utility is Subjective term:
gives different utility to different persons. E.g. playing with a doll gives more utility to a
child and no utility to an adult
Utility is relative term:
same commodity gives different utility at different place
more utility in Kashmir as compare to Mumbai.
Utility has no ethical significance:
whether moral or immoral has Utility. E.g
people is immoral.
Utility depends on intensity of wants
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
utility from the water.
Utility is different from pleasure :
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
Utility is multipurpose:
E.g. coal, electricity, water etc.
Utility is not same as satisfaction:
satisfaction is derived after the consumption.
Utility can not be measure
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
a cardinal measurement of utility.
Types of Utility
Form Utility: when utility is created by changing the form
commodity it is called as
wood.
Time Utility: When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
season.
Place Utility: When util
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
Kashmir than in Mumbai.
COMMERCE TUTORIALS
The concept is popularized by Dr. Alfred Marshall in 1980
Meaning and Definition: Utility is the capacity of the commodity to
It also means the want satisfying power of a commodity. E.g. water has utility
Characteristics of Utility:
Utility is Subjective term: Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
child and no utility to an adult
Utility is relative term: it means it is depended and related on time and place. The
same commodity gives different utility at different place
more utility in Kashmir as compare to Mumbai.
Utility has no ethical significance:
whether moral or immoral has Utility. E.g
immoral.
Utility depends on intensity of wants
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
utility from the water.
Utility is different from pleasure :
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
Utility is multipurpose: A single commodity may have power to satisfy several
E.g. coal, electricity, water etc.
Utility is not same as satisfaction:
satisfaction is derived after the consumption.
Utility can not be measure: utility is the psychological concept and cant be
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
a cardinal measurement of utility.
when utility is created by changing the form
commodity it is called as
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
: When utility is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
Kashmir than in Mumbai.
UTORIALS....................
Utility Analysis
The concept is popularized by Dr. Alfred Marshall in 1980
: Utility is the capacity of the commodity to
It also means the want satisfying power of a commodity. E.g. water has utility
Characteristics of Utility:
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
child and no utility to an adult.
it means it is depended and related on time and place. The
same commodity gives different utility at different place
more utility in Kashmir as compare to Mumbai.
Utility has no ethical significance: Any commodity which satisfy any human wants
whether moral or immoral has Utility. E.g
Utility depends on intensity of wants: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
Utility is different from pleasure : It is not necessary that commodity having utility
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
A single commodity may have power to satisfy several
E.g. coal, electricity, water etc.
Utility is not same as satisfaction: a person derives utility
satisfaction is derived after the consumption.
: utility is the psychological concept and cant be
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
a cardinal measurement of utility.
when utility is created by changing the form
commodity it is called as form utility. E.g. making dress from cloths, chair from
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
Kashmir than in Mumbai.
....................
Utility Analysis
The concept is popularized by Dr. Alfred Marshall in 1980
: Utility is the capacity of the commodity to
It also means the want satisfying power of a commodity. E.g. water has utility
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
it means it is depended and related on time and place. The
same commodity gives different utility at different place
more utility in Kashmir as compare to Mumbai.
Any commodity which satisfy any human wants
whether moral or immoral has Utility. E.g. AK47 has utility to shoot people but killing
: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
is not necessary that commodity having utility
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
A single commodity may have power to satisfy several
a person derives utility
satisfaction is derived after the consumption.
: utility is the psychological concept and cant be
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
when utility is created by changing the form
form utility. E.g. making dress from cloths, chair from
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
....................
Utility Analysis
The concept is popularized by Dr. Alfred Marshall in 1980
: Utility is the capacity of the commodity to
It also means the want satisfying power of a commodity. E.g. water has utility
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
it means it is depended and related on time and place. The
same commodity gives different utility at different place and time. E.g. woolen cloth has
Any commodity which satisfy any human wants
has utility to shoot people but killing
: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
is not necessary that commodity having utility
provides pleasure also some commodity only provide utility but no pleasure in
consumption of that commodity. E.g. Bitter medicine.
A single commodity may have power to satisfy several
a person derives utility during the consumption but
: utility is the psychological concept and cant be
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
when utility is created by changing the form
form utility. E.g. making dress from cloths, chair from
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
....................
The concept is popularized by Dr. Alfred Marshall in 1980 in his book principles of
: Utility is the capacity of the commodity to satisfy human wants.
It also means the want satisfying power of a commodity. E.g. water has utility
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
it means it is depended and related on time and place. The
and time. E.g. woolen cloth has
Any commodity which satisfy any human wants
has utility to shoot people but killing
: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
is not necessary that commodity having utility
provides pleasure also some commodity only provide utility but no pleasure in
A single commodity may have power to satisfy several
during the consumption but
: utility is the psychological concept and cant be
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
(shape, size) of a
form utility. E.g. making dress from cloths, chair from
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
....................Economics
in his book principles of
satisfy human wants.
It also means the want satisfying power of a commodity. E.g. water has utility---thirst
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
it means it is depended and related on time and place. The
and time. E.g. woolen cloth has
Any commodity which satisfy any human wants
has utility to shoot people but killing
: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
is not necessary that commodity having utility
provides pleasure also some commodity only provide utility but no pleasure in
A single commodity may have power to satisfy several wants.
during the consumption but
: utility is the psychological concept and cant be measure in
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
size) of a
form utility. E.g. making dress from cloths, chair from
When utility is created by changing the time of consumption of a
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
commodity it is known as Place Utility. E.g. Woolen clothes has more utility in
Economics
1
in his book principles of
satisfy human wants.
thirst
Utility differs from person to person. The same commodity
tility to different persons. E.g. playing with a doll gives more utility to a
it means it is depended and related on time and place. The
and time. E.g. woolen cloth has
Any commodity which satisfy any human wants
has utility to shoot people but killing
: If the want is more urgent and intensive the utility
derived will be mare and vise versa. E.g. if a person is more thirsty he will derive more
wants.
during the consumption but
measure in
numbers. It can only be compare. But prof. Alfred Marshall has unrealistically assumed
form utility. E.g. making dress from cloths, chair from
commodity it is known as Time Utility. E.g. umbrella has more utility during rainy
ity is created by changing the place of consumption of a
... IQRA


4. Service Utili
service it is called as Service Utility. E.g. Service provided by
Teacher etc.
5. Possession Utility
commodity it is known as
to whole seller to retailer to consumer.
Total Utility And Marginal Utility
Total Utility:
of a commodity during a
Marginal Utility
unit of a commodity
Relationship between TU and MU
Stage one [TU=MU]:
Stage two [TU
increasing at diminishing rate and MU start falling.
Stage three [TU
level in this stage where MU is zero and no increase in TU. This point is called as point of
satiety.
Stage four [TU
start falling and
1. Meaning: It is the sum total of all Utility
derived from consumption of all
possible unites of a commodity during a
given period of time.
2. Formula:
3. Nature: TU increases at a diminishing
rate.
4. After Satiety point: TU start decreasing
after this point
UNITS
1
2
3
4
5
6
IQRA COMMERCE
Service Utility: When
service it is called as Service Utility. E.g. Service provided by
Teacher etc.
Possession Utility
commodity it is known as
to whole seller to retailer to consumer.
Total Utility And Marginal Utility
Total Utility: It is the sum total of all Utility derived from consumption of all possible unites
of a commodity during a
Marginal Utility: It is the additional utility derived from the consumption of an additional
unit of a commodity. Formula
Relationship between TU and MU
Stage one [TU=MU]:
Stage two [TU and MU
increasing at diminishing rate and MU start falling.
Stage three [TU-constant, MU=0]:
level in this stage where MU is zero and no increase in TU. This point is called as point of
Stage four [TU MU=
start falling and MU becomes negative.
Total Utility
Meaning: It is the sum total of all Utility
derived from consumption of all
possible unites of a commodity during a
given period of time.
Formula: TU=U
Nature: TU increases at a diminishing
rate.
After Satiety point: TU start decreasing
after this point
TU
15
27
35
38
38
36
COMMERCE TUTORIALS
ty: When the utility is derived from the person who is providing any
service it is called as Service Utility. E.g. Service provided by

Possession Utility: When utility is created by changing the ownership of a
commodity it is known as
to whole seller to retailer to consumer.
Total Utility And Marginal Utility
It is the sum total of all Utility derived from consumption of all possible unites
of a commodity during a given period of time.
: It is the additional utility derived from the consumption of an additional
. Formula MU = TUn
Relationship between TU and MU
Stage one [TU=MU]: When the consumer consumed first unit TU and MU both are equal.
and MU]: As the consumer go on consuming more units total Utility start
increasing at diminishing rate and MU start falling.
constant, MU=0]:
level in this stage where MU is zero and no increase in TU. This point is called as point of
MU=-ve] : if the consumer consume beyond the point of satiety TU will
MU becomes negative.
Total Utility
Meaning: It is the sum total of all Utility
derived from consumption of all
possible unites of a commodity during a
given period of time.
TU=U
1
+U
2
++U
Nature: TU increases at a diminishing
After Satiety point: TU start decreasing
after this point
MU
15
12
8
3
0
-2
UTORIALS....................
the utility is derived from the person who is providing any
service it is called as Service Utility. E.g. Service provided by
: When utility is created by changing the ownership of a
commodity it is known as Possession Utility. E.g. Goods transfer from manufacturer
to whole seller to retailer to consumer.
Total Utility And Marginal Utility
It is the sum total of all Utility derived from consumption of all possible unites
given period of time.
: It is the additional utility derived from the consumption of an additional
MU = TUn
Relationship between TU and MU:
TU
&
MU


When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
increasing at diminishing rate and MU start falling.
constant, MU=0]: The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
MU becomes negative.
Meaning: It is the sum total of all Utility
derived from consumption of all
possible unites of a commodity during a
++U
n

Nature: TU increases at a diminishing
After Satiety point: TU start decreasing
....................
-10
0
10
20
30
40
1
the utility is derived from the person who is providing any
service it is called as Service Utility. E.g. Service provided by
: When utility is created by changing the ownership of a
Possession Utility. E.g. Goods transfer from manufacturer
to whole seller to retailer to consumer.
It is the sum total of all Utility derived from consumption of all possible unites
given period of time. Formula
: It is the additional utility derived from the consumption of an additional
TUn-1
TU
&
MU

When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
increasing at diminishing rate and MU start falling.
The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
Meaning: It is the sum total of all Utility
possible unites of a commodity during a
Nature: TU increases at a diminishing
After Satiety point: TU start decreasing
It is the additional utility derived from the
consumption of an additional unit of a
commodity

MU=TU
As the consumer consume more MU start
decreasing.
MU becomes negative after this po
....................
1 2
the utility is derived from the person who is providing any
service it is called as Service Utility. E.g. Service provided by
: When utility is created by changing the ownership of a
Possession Utility. E.g. Goods transfer from manufacturer
It is the sum total of all Utility derived from consumption of all possible unites
FormulaTU = U1 + U2 + U3 + ...........+Un
: It is the additional utility derived from the consumption of an additional
Units Consumed
When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
Marginal Utility
It is the additional utility derived from the
consumption of an additional unit of a
commodity
MU=TU
n
-TU
n-1
As the consumer consume more MU start
decreasing.
MU becomes negative after this po
....................
3 4
the utility is derived from the person who is providing any
service it is called as Service Utility. E.g. Service provided by Doctor, lawyer,
: When utility is created by changing the ownership of a
Possession Utility. E.g. Goods transfer from manufacturer
It is the sum total of all Utility derived from consumption of all possible unites
TU = U1 + U2 + U3 + ...........+Un
: It is the additional utility derived from the consumption of an additional
Units Consumed
When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
Marginal Utility
It is the additional utility derived from the
consumption of an additional unit of a
1

As the consumer consume more MU start
MU becomes negative after this po
....................Economics
3 6
1u
Mu
the utility is derived from the person who is providing any
Doctor, lawyer,
: When utility is created by changing the ownership of a
Possession Utility. E.g. Goods transfer from manufacturer
It is the sum total of all Utility derived from consumption of all possible unites
TU = U1 + U2 + U3 + ...........+Un
: It is the additional utility derived from the consumption of an additional

When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
Marginal Utility
It is the additional utility derived from the
consumption of an additional unit of a
As the consumer consume more MU start
MU becomes negative after this point.
Economics
2
1u
Mu
the utility is derived from the person who is providing any
Possession Utility. E.g. Goods transfer from manufacturer
It is the sum total of all Utility derived from consumption of all possible unites
TU = U1 + U2 + U3 + ...........+Un
: It is the additional utility derived from the consumption of an additional

When the consumer consumed first unit TU and MU both are equal.
As the consumer go on consuming more units total Utility start
The consumer reaches a the maximum satisfaction
level in this stage where MU is zero and no increase in TU. This point is called as point of
: if the consumer consume beyond the point of satiety TU will
It is the additional utility derived from the
consumption of an additional unit of a
As the consumer consume more MU start
int.

... IQRA


Introduction:
based on the day to day experience. The more you have of a thing the less you want to
have more of it.
1. Statement of Law:
person derives from a given increase in the stock of a thing diminishes with every
increase in the stock that he already has.
2. Assumptions to the law:
1.
2.
3.
4.
5.
6.
3. Illustration:

As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
beyond that point MU become negative.
4. Exception to the law:
1.
2.
3.
4.
5.
unlLs
IQRA COMMERCE
Law Of Diminishing Marginal Utility [DMU]:
Introduction: This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
have more of it.
Statement of Law:
person derives from a given increase in the stock of a thing diminishes with every
increase in the stock that he already has.
Assumptions to the law:
Cardinality:
Homogeneity:
with respect to size, shape, color, quality etc.
Rationality
is to maximize his satisfaction
Continuity:
after the other and there should not be gap in between the consumption.
Reasonability:
reasonable that means not too large or too small.
No change in taste
Illustration:
As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
beyond that point MU become negative.
Exception to the law:
Money: The law of DMU is not applicable to
of money gives more satisfaction.
Miser: he is more interested more in collection than in consumption. He is
interested more in collection of we
Hobbies: In case of hobbies like collection of stamps or coins every additional
unit will give more and more utility.
Addiction:
Reading: As the scholar go on reading books he
unlLs Mu
1
2
3
4
3
6
COMMERCE TUTORIALS
Law Of Diminishing Marginal Utility [DMU]:
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
Statement of Law: Other things being equal, The additional ben
person derives from a given increase in the stock of a thing diminishes with every
increase in the stock that he already has.
Assumptions to the law:
Cardinality: It is assumed that Utility can be measure in numbers.
Homogeneity: All the units of the given commodity should be perfectly identical
with respect to size, shape, color, quality etc.
Rationality: The consumer must be a rational consumer whose primary obje
is to maximize his satisfaction
Continuity: the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
Reasonability: The units of the commodity to be consumed should be
reasonable that means not too large or too small.
No change in taste and preference of the consumer.

As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
beyond that point MU become negative.
Exception to the law: T
The law of DMU is not applicable to
of money gives more satisfaction.
he is more interested more in collection than in consumption. He is
interested more in collection of we
In case of hobbies like collection of stamps or coins every additional
unit will give more and more utility.
in case of drunker every addition peg of liquor will add more utility.
As the scholar go on reading books he
Mu
13
12
8
3
0
-2
UTORIALS....................
-3
10
13
20
A
x
|
s

1
|
t
|
e
Law Of Diminishing Marginal Utility [DMU]:
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
Other things being equal, The additional ben
person derives from a given increase in the stock of a thing diminishes with every
increase in the stock that he already has.
Assumptions to the law:
It is assumed that Utility can be measure in numbers.
All the units of the given commodity should be perfectly identical
with respect to size, shape, color, quality etc.
: The consumer must be a rational consumer whose primary obje
is to maximize his satisfaction.
the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
The units of the commodity to be consumed should be
reasonable that means not too large or too small.
and preference of the consumer.
As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
beyond that point MU become negative.
This law has following exceptions.
The law of DMU is not applicable to
of money gives more satisfaction.
he is more interested more in collection than in consumption. He is
interested more in collection of we
In case of hobbies like collection of stamps or coins every additional
unit will give more and more utility.
in case of drunker every addition peg of liquor will add more utility.
As the scholar go on reading books he
....................
-3
0
3
10
13
20
1 2
Law Of Diminishing Marginal Utility [DMU]:
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
Other things being equal, The additional ben
person derives from a given increase in the stock of a thing diminishes with every
increase in the stock that he already has.
It is assumed that Utility can be measure in numbers.
All the units of the given commodity should be perfectly identical
with respect to size, shape, color, quality etc.
: The consumer must be a rational consumer whose primary obje

the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
The units of the commodity to be consumed should be
reasonable that means not too large or too small.
and preference of the consumer.
As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
his law has following exceptions.
The law of DMU is not applicable to
of money gives more satisfaction.
he is more interested more in collection than in consumption. He is
interested more in collection of wealth.
In case of hobbies like collection of stamps or coins every additional
unit will give more and more utility.
in case of drunker every addition peg of liquor will add more utility.
As the scholar go on reading books he
....................
3 4
MU
Law Of Diminishing Marginal Utility [DMU]:
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
Other things being equal, The additional ben
person derives from a given increase in the stock of a thing diminishes with every
It is assumed that Utility can be measure in numbers.
All the units of the given commodity should be perfectly identical
with respect to size, shape, color, quality etc.
: The consumer must be a rational consumer whose primary obje
the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
The units of the commodity to be consumed should be
reasonable that means not too large or too small.
and preference of the consumer.
As shown in the diagram units are represented on X axis
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
his law has following exceptions.
The law of DMU is not applicable to money because every addition
he is more interested more in collection than in consumption. He is
In case of hobbies like collection of stamps or coins every additional
in case of drunker every addition peg of liquor will add more utility.
As the scholar go on reading books he will derive more utility.
....................
3 6
Law Of Diminishing Marginal Utility [DMU]:
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
Other things being equal, The additional benefit which a
person derives from a given increase in the stock of a thing diminishes with every
It is assumed that Utility can be measure in numbers.
All the units of the given commodity should be perfectly identical
: The consumer must be a rational consumer whose primary obje
the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
The units of the commodity to be consumed should be

As shown in the diagram units are represented on X axis and MU is on Y axis. MU
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
his law has following exceptions.
money because every addition
he is more interested more in collection than in consumption. He is
In case of hobbies like collection of stamps or coins every additional
in case of drunker every addition peg of liquor will add more utility.
will derive more utility.
....................Economics
Mu
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
efit which a
person derives from a given increase in the stock of a thing diminishes with every
It is assumed that Utility can be measure in numbers.
All the units of the given commodity should be perfectly identical
: The consumer must be a rational consumer whose primary obje
the consumer must consume all the given units of the commodity one
after the other and there should not be gap in between the consumption.
The units of the commodity to be consumed should be
and MU is on Y axis. MU
curve is downward slopping from left to right indicating that as the consumer go on
consuming more and more units MU declines. And at one point he derive zero utility and
money because every addition
he is more interested more in collection than in consumption. He is
In case of hobbies like collection of stamps or coins every additional
in case of drunker every addition peg of liquor will add more utility.
will derive more utility.
Economics
3
This Law is given by Famous Economist Dr. Alfred Marshall. This law is
based on the day to day experience. The more you have of a thing the less you want to
person derives from a given increase in the stock of a thing diminishes with every
All the units of the given commodity should be perfectly identical
: The consumer must be a rational consumer whose primary objective
the consumer must consume all the given units of the commodity one
and MU is on Y axis. MU
consuming more and more units MU declines. And at one point he derive zero utility and
money because every addition units
In case of hobbies like collection of stamps or coins every additional
in case of drunker every addition peg of liquor will add more utility.
... IQRA


1. Introduction:
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
should maximize his
same time.
2. Statement:
Other things being equal, a rational consumer with given income and taste should
spend his income on different
unit of mon
i.e. MU
3. Assumption:
1.
2.
3.
4.
5.
6.
4. Illustration:
Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
The

The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
fruit to get equal satisfaction from all three

IQRA COMMERCE
Introduction:
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
should maximize his
same time.
Statement:
Other things being equal, a rational consumer with given income and taste should
spend his income on different
unit of money spent in each direction of expenditure brings in equal marginal utility.
i.e. MU
x
/P
x
= MU
Assumption:
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
Price of the
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
maximize his satisfaction.
Income of the consumer is fixed and is spent on the given commoditi
Illustration:
Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
The prices of the commodit
SWLL1S
unlLs Mu
1
2
3
4
3
6
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
fruit to get equal satisfaction from all three
COMMERCE TUTORIALS
Law of EQUI
Introduction:
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
should maximize his satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
spend his income on different
ey spent in each direction of expenditure brings in equal marginal utility.
= MU
y
/P
y
= MU
Assumption:
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
Price of the commodity remains unchanged.
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
maximize his satisfaction.
Income of the consumer is fixed and is spent on the given commoditi

Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
prices of the commodit
SWLL1S
Mu Mu/p
60
40
32
16
12
8
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
fruit to get equal satisfaction from all three
UTORIALS....................
Law of EQUI-MARGINAL UTILITY
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
spend his income on different goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
= MU
z
/P
z
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
commodity remains unchanged.
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
maximize his satisfaction.
Income of the consumer is fixed and is spent on the given commoditi
Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
prices of the commodities are
vLCL1A8LL
Mu/p Mu
13 48
10 30
8 18
4 12
3 6
2 2
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
fruit to get equal satisfaction from all three
....................
MARGINAL UTILITY
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
commodity remains unchanged.
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
Income of the consumer is fixed and is spent on the given commoditi
Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
.4, 6 and 10 respectively.
vLCL1A8LL
Mu/
48 8
30 3
18 3
12 2
6 1
2 0.33
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
fruit to get equal satisfaction from all three commodities.

....................
MARGINAL UTILITY
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
commodity remains unchanged.
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
Income of the consumer is fixed and is spent on the given commoditi
Let us assume that the consumer has a fixed given income which he is spending on
three commodities Sweets, Vegetable and Fruits.
.4, 6 and 10 respectively.
l8ul1S
Mu
8 30
3 20
3 10
2 3
1 2
0.33 0
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
commodities.
....................
MARGINAL UTILITY
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
It is assumed that Utility can be measure in numbers.
MU of money is constant it is same for all people rich as well as poor
All the units are identical in shape, size, color, taste etc.
The consumer must be a rational consumer whose primary objective is to
Income of the consumer is fixed and is spent on the given commoditi
Let us assume that the consumer has a fixed given income which he is spending on
.4, 6 and 10 respectively.

Mu/
3
2
1
0.3
0.2
0
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of

....................Economics
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
MU of money is constant it is same for all people rich as well as poor
The consumer must be a rational consumer whose primary objective is to
Income of the consumer is fixed and is spent on the given commodities.
Let us assume that the consumer has a fixed given income which he is spending on
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of
Economics
4
This Law is given by Famous Economist Dr. Alfred Marshall. It is also known as law
of substitution. It is the extended form of law of DMU. It explains how a consumer
satisfaction while consuming more than one commodity at the
Other things being equal, a rational consumer with given income and taste should
goods and services in such a manner that the last
ey spent in each direction of expenditure brings in equal marginal utility.
Let us assume that the consumer has a fixed given income which he is spending on
The consumer should choose 5 units of sweets, 3 units of Vegetable and 1 unit of