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Law of Diminishing Marginal Utility: Definition of the Law: "Other things remaining the same when a person takes successive units of a commodity, the marginal utility diminishes constantly". The marginal utility of a commodity diminishes at the consumer gets larger quantities of it. Marginal utility is the change in the total utility resulting from one unit change in the consumption of a commodity per unit of time. Assumptions: Following are the assumptions of the law of  diminishing marginal utility . The utility is measurable and a person can express the utility derived from a commodity in qualitative terms such as 2 units, 4 units and 7 units etc. A rational consumer aims at the maximization of his utility. It is necessary that a standard unit of measurement is constant A commodity is being taken continuously. Any gap between the consumption of a commodity should be suitable. There should be proper units of a good consumed by the consumer. It is assume...

How to get edge in National Income Accounting How to determine National Income by Value Added Method The first step is to determine Gross Value added at market Price. GVAmp =Value of Output - Intermediate Consumption  Value of Output = Sales + Change In stock Intermediate Consumption = Purchase of Raw material. So  GVAmp =Sales + Change in Stock-Intermediate Consumption Few things to remember -: Sales = Domestic Sales+ Exports Purchase of Raw material = Domestic Purchase + Imports If Sales is given then no need to add exports as sales include Exports. or the Expanded Farmula may be GVAmp =Sales + Change in Stock-Intermediate Consumption GVAmp = ( Domestic Sales + Exports) + Change in Stock-Intermediate Consumption GVAmp = [( Domestic Sales + Exports) + Change in Stock] -(domestic purchase of raw material + Imports)     Purchase of machinery  is not considered as intermediate consumption as it is not for resale. If GVAmp of all the firms is determin...

Concept of Private Income, Personal Income and Personal Disposable Income. The first requirement to understand this concept isto know how Net Domestic Product is Divided between Private sector and Government. NDPfc can be divided in to two parts :- Part of NDPfc accruing to Private sector and Part of NDPfc accruing to Government Sector. NDPfc = Part of NDPfc accruing to Private sector + Part of NDPfc accruing to Government Sector. Part of NDPfc accruing to Government Sector = Savings of Non Departmental enterprises + Income of Government from Property and Entrepreneurship Part of NDPfc accruing to Private sector = NDPfc - Part of NDPfc accruing to Government Sector. Part of NDPfc accruing to Private sector = NDPfc – (Savings of Non Departmental enterprises + Income of government from Property and Entrepreneurship) After getting through this concept now private Income can be calculated easily. In order to determine Private Income you need to remember Private Income= Part of NDP...