Multiple choice

Which of the following economists has called the 'Law of Equi-Marginal Utility' as 'Principle of Income Allocation'?

  1. Leibhafsky

  2. Leftwich

  3. Marshall

  4. Koopmans
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C Correct answer
Explanation

Marshall developed the Law of Equi-Marginal Utility as part of his utility theory analysis, which explains how consumers allocate income across goods to maximize satisfaction. This principle states that utility is maximized when the marginal utility per unit of expenditure is equal across all goods purchased. The alternative framing as 'Principle of Income Allocation' emphasizes the budget allocation aspect of consumer choice theory.

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