IGNOU BCOG 171 2026 2027 - State the Law of Equimarginal Utility. Discuss its limitations

Question

State the Law of Equimarginal Utility. Discuss its limitations

13 Aug 2026

Answer :

Word Count : 507

The Law of Equimarginal Utility states that a consumer obtains maximum satisfaction from the available income when the income is distributed among different goods and services in such a way that the marginal utility derived from the last unit of money spent on each commodity is equal. In other words, the consumer should allocate expenditure among different goods until the marginal utility per unit of expenditure becomes equal for all goods. The law can be expressed as: MUx/Px = MUy/Py = MUz/Pz Here, MU represents marginal utility and P represents the price of the commodity. For example, if a consumer purchases food, clothing and entertainment, maximum satisfaction is achieved when the marginal

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