Question

Describe the assumption of utility and law of DMU

Answer 1

Answer:

there are 5 or 6 main assumption of the utilities

Answer 2

Answer:

Law of DMU states that as we consume more and more units of a commodity , then the utility derived from each successive unit goes on decreasing...

Assumptions of DMU are

1.Standard units of a commodity are consumed

2.Consumer is assumed to be rational

3.utility can be measured in quantitative terms

4.Consumption is a continuous process

5.There must be no change in the quality of the commodity..

Assumptions of Utility..

The utility analysis is based on the cardinal concept

The Hypothesis of Independent Utility

The constancy of the Marginal Utility of Money