Tuesday, July 31, 2012

Class XI, Principles of Economics, "Criticism"


One of the pivoted assumptions of the law is that utility is measurable. In other words it is assumed that it is possible to express the utility or satisfaction, which a person desires from a good in qualitative terms. But utility relates to the state of mind of an individual. Thus it is a subjective term and is capable of being measured.

The law assumes that margined utility of money is constant. But it is not true. Actually as more and more is spent on the purchase of a commodity and less and less money is left with the purchaser the marginal utility of money goes on increasing. Thus the unit of measurement itself is variable.

The law does not apply to all types of commodities and persons. A drunkard gets more satisfaction on taking successive cups of wine. Greed increases with more money with some people.

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