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. The available resources must be allocated among all the options or activities to get equal marginal utility.
Example- if I am having 2000 INR with me and I need to buy 4 things with it, I will not necessarily spend 500 INR on each item, instead I will be allocating the total amount among the four so as to equate the marginal utility of each of the four items.
Example- if I am having 2000 INR with me and I need to buy 4 things with it, I will not necessarily spend 500 INR on each item, instead I will be allocating the total amount among the four so as to equate the marginal utility of each of the four items.
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