In this article we will discuss about the relationship between Total Utility and Marginal Utility. Every commodity possesses utility for the consumer. When the consumer buys apples he receives them in units, 1, 2, 3, 4 etc., as shown in table 1. To begin with, 2 apples have more utility than 1; 3 more utility than 2, and 4 more [...]
The below mentioned article provides an overview on the Proportionality Rule or Consumer's Equilibrium. The Proportionality Rule is known by various names. It is termed as the Law of Substitution, the Law of Maximum Satisfaction, the Law of Indifference, the Law of Equi-marginal Utility and Gossen’s Second Law. Marshall defined it thus: “If a person has a thing which he [...]
Neo-classical Theory or Loanable Funds Theory: An improved version of classical interest rate theory was provided by neo-classical economists like K. Wicksell, D. H. Robertson. This theory has come to be known as the loanable funds theory. This theory holds that the rate of interest—like any other price—is determined by the demand for and supply of loanable funds. This theory [...]