Q.State the assumptions of the Law of Equi-Marginal Utility.

This law, like the Law of DMU, holds only under a specific set of conditions that the Std XII syllabus expects a student to state.

The Law of Equi-Marginal Utility rests on the following assumptions: (i) the consumer's income is fixed/given and is spent entirely on the goods under consideration, with no saving left over; (ii) utility is cardinally measurable in utils, exactly as assumed for the Law of DMU; (iii) the Law of Diminishing Marginal Utility operates separately for each good as the consumer buys more units of it, which is what makes a genuine equilibrium point possible; (iv) the consumer is rational, deliberately aiming to maximise total satisfaction from the given income; (v) the prices of all the goods are given and remain constant throughout the period of the decision; and (vi) the consumer's tastes, preferences and habits remain unchanged while the allocation decision is being made. Together, these assumptions ensure that the consumer can meaningfully compare the margin …

Students sometimes state only 'fixed income' and 'rational consumer' and forget that the Law of DMU must also be assumed to operate for each good — without diminishing MU, there would be no reas …