What's the difference between MUx and MUm
Dear Student
The marginal utility of money refers to the valuation of an additional unit of rupee for a consumer. It is a subjective concept and the consumer himself derives the marginal unit of money. The marginal unit of money is assumed to be constant in utility analysis.
For example - The marginal utility of each unit of a rupee is 5 utils. Then his marginal utility of money will be 5 utils.
On the other hand, the marginal utility of a commodity refers to the addition to the total utility due to the consumption of an additional unit of a commodity.
For example, a particular consumer consumes two apples one after another. The consumption of the first apple provides him the satisfaction of 5 utils, while the consumption of the second apple provides him with the satisfaction of 3 utils. Then the marginal utility from the first unit of apple will be 5 utils and marginal utility from the second unit of apple will be 3 utils.
Regards
The marginal utility of money refers to the valuation of an additional unit of rupee for a consumer. It is a subjective concept and the consumer himself derives the marginal unit of money. The marginal unit of money is assumed to be constant in utility analysis.
For example - The marginal utility of each unit of a rupee is 5 utils. Then his marginal utility of money will be 5 utils.
On the other hand, the marginal utility of a commodity refers to the addition to the total utility due to the consumption of an additional unit of a commodity.
For example, a particular consumer consumes two apples one after another. The consumption of the first apple provides him the satisfaction of 5 utils, while the consumption of the second apple provides him with the satisfaction of 3 utils. Then the marginal utility from the first unit of apple will be 5 utils and marginal utility from the second unit of apple will be 3 utils.
Regards