Importance of law in consumption

Advantage of this law is that the consumer is able to derive maximum satisfaction from given resources

The consumer can apply this law in

  • Spending money
  • Making use of commodity
  • Apportioning money income over present and future events.
  • Allocating a commodity over present and future uses.

Spending money: As we know that a person can obtain maximum satisfaction out of the money that he spends by following this law.

He has only to take care that the derived from the last unit of money spent on each head is nearly the same.


Making use of commodity: This law can be made to apply to a commodity which has several uses for instance, if we have 20 m of cloth, we can use for the preparation of shirts, kurtas or caps etc. The wire course will be to distribute cloth on these various use in such a manner as to derive, more or less, the same utility from the last meter of cloth devoted to each purpose.


Present and future use of money: According to the law of equi-Marginal utility, one should apportion one’s income over saving and spending in such a way that the satisfaction yielded by the last rupee in each case is, more or less, the same.

This would enable one to earn maximum satisfaction.


Present and future use of commodity: Sometimes a person uses only one part of a commodity, and sets aside another part for being used in future. Here, again he should act according to the law of Equi- Marginal utility. He should distribute the whole volume of the commodity over present and future uses in such a manner that the satisfaction yielded by marginal unit in each case is, more or less the same.

  • It is equally important in the field of production where the producer is advised to substitute a cheaper factor of production for a dearer one.
  • In exchange purchaser purchases the articles which gives them greater satisfaction for the same price and thus try to follow this law.
  • In the sphere of the distribution, the law has an important bearing. The theory of equal distribution of wealth, which is the basis of socialistic movements.
  • In the public finance it is the guiding principle in the matter of revenue and expenditure.