# Explain The Principle Of Equimarginal Utility?

In economics it is known as law of Equi-marginal Utility. It basically shows the behavior of a consumer in allocating his limited earnings among different goods and services. In short this law tells that how a consumer distributes his earnings between set of goods so as to get maximum satisfaction.
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The Principle of euqmarginal utility states that a rational consumer will always try to maximise his satisfaction by buying a combination of two or more goods which give him maximum marginal utility per dollar for each good, until the budget is used up completely.

Mathematically, it means:

MU of good A/ Price of A = MU of good B/ Price of B

In any case when the Marginal Utilities of the goods A and B are unequal, the consumer will purchase a combination that will give him highest Marginal Utility per dollar value of each good, in such a way that the entire budget amount is spent.
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We will use the utility theory to explain consumer demand and to understand the nature of demand curves. For this purpose, we need to know the condition under which I, as a consumer, am most satisfied with my market basket of consumption goods. We say that a consumer attempts to maximize his or her utility, which means that the consumer chooses the most preferred of goods from what is available.
Can we see what a rule for such an optimal decision would be? Certainly I would not expect that the last egg I am buying bring exactly the same marginal utility as the last pair of shoes I am buying, for shoes cost much more per unit than eggs. A more sensible rule would be: If good A costs twice as much as good B, then buy good A only when its marginal utility is at least twice as great as good B's marginal utility.
This leads to the equimarginal principle that I should arrange my consumption so that every single good is bringing me the same marginal utility per dollar of expenditure. In such a situation, I am attaining maximum satisfaction or utility from my purchases. This is clear concept of equimarginal principle.
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