Equi marginal utility is a principle in economics that states that when an individual is making consumption decisions, they will allocate their resources in such a way that the marginal utility (or the additional satisfaction) gained from consuming each additional unit of a good or service is equal. In other words, an individual will allocate their resources in a way that ensures that the last unit of a good or service they consume provides the same level of satisfaction as the previous units.
The concept of equi marginal utility is based on the idea of diminishing marginal utility, which states that as an individual consumes more units of a good or service, the satisfaction they derive from each additional unit will decrease. This is because the first units of a good or service are often the most satisfying, and as an individual consumes more, the utility (or satisfaction) they derive from each additional unit becomes less and less.
For example, imagine that you have a limited amount of money to spend on food. You may decide to allocate your resources in such a way that the first few units of food you consume provide a high level of satisfaction, while the additional units provide a lower level of satisfaction. This means that the marginal utility of the first few units of food will be high, while the marginal utility of the additional units will be lower.
The principle of equi marginal utility can be used to help individuals make rational consumption decisions. For example, if an individual is trying to decide whether to purchase one more unit of a good or service, they can consider the marginal utility they will derive from that unit and compare it to the cost of the unit. If the marginal utility is greater than the cost, then it makes sense for the individual to purchase the additional unit. If the marginal utility is less than the cost, then it may not be worth it for the individual to purchase the additional unit.
In summary, the principle of equi marginal utility states that individuals will allocate their resources in a way that ensures that the marginal utility gained from consuming each additional unit of a good or service is equal. This principle helps individuals make rational consumption decisions by considering the marginal utility and cost of each unit.