1. Managerial Uses of Price Elasticity of Demand
Determination of price under Monopoly.
Basis of Price discrimination.
Price determination of Joint Products.
Determination of prices of public utilities.
International Trade.
Effect on Employment.

2. Law of Equi-marginal utility
The Law of Equi-marginal utility is the further elaboration of the Law of diminishing marginal utility.
It is also known as the Law of Substitution and the Law of maximization of satisfaction.

3. Continue….
“The house holds maximizing the utility will so allocate the expenditure between commodities that the utility of the last Rupee spent on each item is equal.”
Formula for Consumer’s equilibrium…
MUA/PA = MUB/PB = ….= MUN/PN

4. Continue…. Assumptions: Utilities are independent
Marginal utility of money remains constant.
Utility is cardinal.
Consumer is rational.

5. Explanation We assume that: The consumer has Rs.5 with him.
He has to spend his income on two goods A and B.
The price of each good is Rs.1 per unit.

6. Table…
Units of money
MU of A
MU of B 1 12 10 2 8 3 6 4 5
Total 39 30

7. Limitations.. Utility is immeasurable. Indivisible goods
Prices and tastes are changing.
Time Factor.