Question: Which is the First law of Gossen?
A Law of demand
B Law of diminishing marginal utility
C Law of equi-marginal utility
D Consumers surplus
Answer: Law of diminishing marginal Utility
| Concept |
Description |
| Law of Diminishing Marginal Utility |
· The Law of Diminishing Marginal Utility is also known as the First law of Gossen.
· It states that as more you have of something, the less additional satisfaction each additional unit provides. |
| Law of Demand |
· The Law of Demand states that, there is an inverse relationship between price and quantity demanded. |
| Law of Equi-Marginal Utility |
· Law of equi-marginal utility suggests that a rational consumer allocates their income among various goods and services in such a way that the marginal utility (satisfaction) per dollar spent is the same for each item.
· This means consumers strive for equilibrium where they maximize overall satisfaction. |
| Consumer Surplus |
· Consumer Surplus represents the difference between what consumers are willing to pay for a good or service (their reservation price) and what they actually pay for it. |
