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Unformatted text preview: The DMU principle is applicable only in the case of a single commodity. In reality a consumer has to purchase multiple goods. He has therefore to compare the marginal utilities of all such goods that he purchases with the relative prices of these goods. With the limited income that the consumer possesses he may not be able to reach the point of equality between marginal utility and price of each commodity. He may have to stop before such a point is reached and start spending on some other good....
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This note was uploaded on 11/26/2011 for the course ECONOMIC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10