Describe the assumption of utility and law of DMU
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there are 5 or 6 main assumption of the utilities
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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
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