The consumer will spend his money income on different goods in such a way that marginal utility of each good is proportional to its price
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Limitations of Law of Equi-Marginal Utility
- It is difficult for the consumer to know the marginal utilities from different commodities because utility cannot be measured.
- Consumer are ignorant and therefore are not in a position to arrive at an equilibrium.
- It does not apply to indivisible and inexpensive commodity.