What is the principle of equimarginal utility?

Economics Marginal Utility Questions



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What is the principle of equimarginal utility?

The principle of equimarginal utility states that a rational consumer will allocate their limited income or resources in such a way that the marginal utility derived from the last unit of each good or service consumed is equal. In other words, the consumer will maximize their total utility by spending their money on different goods or services until the marginal utility per dollar spent is the same for each item.