LAND UTILIZATION Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
Law of equimarginal utility
Generalisation of the law
This principle applies to all of the commodities consumer is consuming i.e the MU of expenditure of last unit of money on all of them must be same. MU of expenditure on a commodity is defined as the ratio of MU of commodity to it's price.
The generalised equilibrium condition for consumer's equilibrium is
MU of A MU of B. MU of C
___________ = ____________ = ___________
Price of A Price of B Price of C
The ratio of MU of A and MU of B represent the rate at which consumer is willing to substitute A for B while the ratio of price of A and price of B represents the rate at which he can substitute A for B in market. The ratio between MU and price of commodity must be same in all cases.
Importance
a) Production : This law is applied to substitution og various factors of production to the point where marginal returns from all the factors are equal.
b)Distribution :This law tells us the best distribution of a commodity that is obtained when MU of commodity to each consumer is same .
c)Income allocation : It helps in allocation of income between consumption and saving .An individual tends to equate marginal gain from an increase in consumption to the marginal loss from resultant decline in savings.
d)Spendings :This law is helpful in guiding an individual in spending his savings on different assets . Maximum satisfaction requires him to equate marginal valuation of expected gain from the possession of different types of assets.
Limitations
a)Utility cannot be measured: The law is based on measurable utility but in practice it is not possible. Utility is psychic entity which cannot bd measured in exact numbers.
b)Indivisible goods :This law does not apply in the use of indivisible goods because consumer's cannot divide the goods to adjust the units of utilities derived from their consumption.
c)Constant income and price :Limited income and constant prices set a limit for maximisation of utility by the consumers. The consumer cannot go beyond this limit.
d)Durable goods :It is impossible to calculate MU of durable goods like furniture ,electric appliances etc .
e)Effects of fashion :Human beings spend a lot of their money on fulfilling social customs and fashions like marriage ceremonies ,birthday parties. These acts of human beings are not done on the basis of principle of equimarginal utility.
Comments
Post a Comment