A
PROJECT REPORT
ON
“MARGINAL UTILITY DECREASES FROM THE VERY SECOND UNIT OF CONSUMPTION BUT EXCEPTIONAL
CASES MAY HAPPEN”
Under the guidance of
FACULTY CO-ORDINATOR MR.SUNIL KAKKAR G
SUBMITTED BY: SHYAM SUNDER GUPTA
PGDM 1ST Sem- (2008-2010) SEC -B
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Maharishi Arvind Institute of Science & Management Ambabari Circle, Bharti Path, Ambabari, Jaipur-302023 (INDIA) Tel: +91-141-2335487, 2234216 - Telefax: +91-141-2335120 E-mail: [email protected] Website: www.maism.com
CONTENTS
THEORY:
What is Marginal Utility? Law of Diminishing Marginal Utility.Assumptions of the Law of DMU.Exceptions of Law of DMU.Law of Equi-Marginal Utility.Assumptions of the Law of EMU.INTRODUCTION OF THE PROJECT.
Topic of the Project Objective Scope Significance Data Interpretation and analysis.
ANNEXURE:
List of Respondents Specimen of Questionnaire.
CONCLUSION
UTILITY It is the want satisfying property of a commodity. It is the psychological feeling of satisfaction, pleasure, happiness, which a consumer derives from consumption ,possession, or use of a particular commodity.
WHAT IS MARGINAL UTILITY?
Is an important concept used in economic analysis.A. Marginal Utility (MU) refers to additional utility when one unit of a commodity
is consumed. B. It may also be defined as change in the Total Utility i.e. (Δ TU) obtained from the consumption of an additional unit of a commodity. It is expressed as
MU = ΔTPo ΔQ
C.where TU = total utility, and ΔQ = change in quantity consumed by one unit.Another way of expressing Marginal Utility (MU), when the number of units consumed is nth unit = TUn - TUn
Law of Diminishing Marginal Utility This law states that as the quantity consumed of a commodity increases, the utility
derived from each successive unit decreases , consumption of all other commodities remaining the same.
In simple words, when a person consumes more and more units of a commodity per unit of time, e.g., ice cream, keeping the consumption of all other commodities constant, the utility which he derives from the successive units of consumption goes on diminishing.
Total and Marginal Utility Schedules
No.of unit Consumed Total Utility Marginal Utility1 8 82 14 63 18 44 20 25 20 06 18 -2
As shown in the table, with the increase in the number of units consumed per unit of time, the TU increases but at a diminishing rate
Assumptions of the law:
Unit of the consumer good must be a standard one. Consumer’s preference or taste should remain same during period of consumption. There must be continuity in consumption. Mental condition of consumer must remain normal during period of consumption.
Exceptions to the law; The law does not apply to the commodities which are used as a status symbol. For the goods whose price might change in future. Is not applied in the case of Giffen goods. Consumption of very small units of commodity.
The Law does not hold to the complementary goods.
Personal habits (addiction)
CRITICISMS OF THE LAW
Utility is not measurable. Marginal utility of money does not always remains constant. This Law is based on the nature of the consumer.
LAW OF EQUI-MARGINAL UTILITY
This Law states that a consumer consumes various goods in such quantities that the MU derived per unit of expenditure on each good is the same.
In other words, a rational consumer spend his income on various goods he consumes in such a manner that each rupee spent on each good yield the same MU.
Thus, the consumer will be in equilibrium when he is spending his given money income in such a manner that the following equation holds good.
MUx = Px MUy Py
LAW OF D.M.U
Rational human behavior.
No change in the price of related goods.
No change in taste. Fashion, and income of the consumer.
Utility is measurable.
Marginal Utility of money is constant.
CRITICISIMS OF THE LAW
Change in the price of the related good.
Non- availability of goods.
Unrealistic assumptions.
All human beings are not rational.
Objective: - I have explained the law of diminishing marginal utility above. This survey has been performed to testify the fact of existence of exceptions to this law.
Scope: - The law of diminishing marginal utility is very comprehensive and a well pervasive law of micro-economics which applies to every single consumption by any living being. The consumption may cover consumption of food, clothes, jewelry, automobiles, cell phones, etc.
Significance: - The law of diminishing marginal utility is very important law of micro-economics. Following points show the significance of application of this law:-
Product planning This law holds prime importance in understanding consumer behavior in respect of the consumption of any commodity. The application of this law facilitates the product planning by the various organizations;
Product innovation This law also facilitates product innovation by various organizations. By understanding the consumption and satisfaction pattern of any particular product, organizations can make timely changes into the products so that the consumers can be attracted for the consumption.
Sales Promotion
This law is very useful for sales promotion. Normally the demand of the commodity may be increased by reducing its price.
Price Determination
This law is helpful for determination of the prices also. The maximum price of any commodity will depend upon the marginal utility derived from it. The price of no commodity is higher than the marginal utility obtained by the consumer from it. That is why. When production of a commodity is in high quantity, its price is low and when production is low, its price normally
becomes high
DATA ANALYSIS AND INTERPRETATIONTable-1 for all the Products available in the Project
S.no. Product Specification
Behaving normally (in times)
Behaving exceptionally(in times)
Behaving constant(in times)
Product category
1 Bear II2 Juice III3 Lassi I4 Bhel puri II5 Tea II III6 Upma I7 Apple I8 Pani puri I III9 Rice I10 Papaya I11 Dal roti II III12 Coffee IIII13 Chawmeen I I14 Gajak II15 Gajar’halwa I III16 Fruits I II17 Dalbati I18 Breads II I19 choorama II20 Chocolates IIIIIIII21 Paw bhaji III II22 Jalebi II23 rasmalai I24 Snacs IIII25 Pizza I I26 Chicken I27 Cigarettes III28 Phetha I29 Kurkure I30 Chole bhature I31 Milk IIIIII32 cachori I II33 Namkeen II34 Kaju katali I IIIII35 Paneer II36 icecream II37 Maggi II IIIIII38 Patties I IIIII39 Banana IIII40 Samosa III IIII
Table 2 – Top Ten products behaving exceptionally (with graphs)
CIGRATE
EXCEPTION CASE 100% -EXCEPTION
S.no.Product specification
Behaving exceptionally(in times)
Behaving normally (in times)
Behaving constant(in times)
Product category
1 Cigarettes IIII2 Alcoholic
drinksII
3 Cold drink IIIIII I4 Tikki I III5 Tea III II6 Dosa II III7 Coffee IIII
COLD DRINK
EXCEPTIONAL85%
NORMAL15%
EXCEPTIONAL
NORMAL
Table 3 – Top Five products behaving normally (with graphs)
S. No. Product Specification
Behaving Normally (in times)
Behaving exceptionally(in times)
Behaving constant(in times)
Product category
(show in tally marks – repeatedness in whole project)
1 Paw bhaji III II2 Idli
sambharII I
3 Samosa III II4 Dosa III II5 bhelpuri II
SAMOSA
EXCEPTIONAL40%
NORMAL60%
EXCEPTIONALNORMAL
SI.NO Name of consumer Product name Address 1
Nikhil khandelwal
Bear,juice,pawbhaji 54,jagdamba colony naya kheda
9351918016
2 Sita devi Rasgulla,phetha Plot no-23 laxmi colony
3 Usha devi Idli,sambhar,rasgulla, cachori
Jagdamba colony naya kheda
0141-2336760
4 Sita ram jhalani
Khir,gajar’halwa,dal-bati 56, jagdamba colony
5 Nidhi khandelwal
Gajar’halwa, chawmean, paw-bhaji
Sector 2 naya kheda vidhadhar nagar
6 Bhupendra singh
Pawbhaji,tikki,kachori c-63 vijay bihar colony naya kheda
9351181188
7 Vijendra singh
Kachori,tea,dal ki pakodi Vijay bihar colony main road
8 Ajitesh Fruits,cold-drink,snacs b-36 naya kheda
9 Praveen gupta
Breads,milk,banana 57-jagdamba colony naya kheda
10. Ankita kumara
Kurkure,coffee,upma 1148-chandpol market
9837125076
11 Vijay kumar jain
Chole-bhature,magi,tikki C-14 vijay bihar colony
9928395861
12 Shamhudayal Samosa,gulab-jamun,namkeen
C-14 vijay bihar colony
13 Rad-dhir singh
Apple,bread,banana Near the khandelwal tawar
982919539
14 Ravi sharma Noodals,tikki,bhelpuri c-3b naya kheda ambabari
9799138077
15 Sanjay maheswari
Milk,dal-roti,tea Near the khandelwal tawar
9314137990
16 Santosh maheswari
Choorma,bread, jalebi Near mahendra public school
9314137990
k.t17 Kamal
mahibarNoodals,kaju-katali,cold drink
Gandhi chauraha samsabad agra
09719398798
18 Poonam g Kaju-katali,idli-sambhar,dosa
Gopal-pura agara road samsabad agra
09957674589
19 Nimit gupta Dosa,samosa,chawmean Near the svm school agra
09358607267
20 Akhilesh jain Paneer,noodals,gajak Ram nagar colony gate sanganerigate
9887024491
21 Madan yadav Dosa,pizza,samosa d-16 shiv marg naya kheda
9998389183
22 Mukesh lal yadav
Munga’halwa,juice,cachori d-14 shyam vihar colony
09219963080
23 Girish chand saini
Milk,banana,papaya c-23 shiv marg naya kheda
9983850005
24 Raj jain Dal rice,gobhi Mall road near radhe bakers
9214306544
25 Mahesh jain Bhelpuri,choklate, cigrate Mall road e-46 naya kheda
9214934728
26 Ramesh kumawat
Samosa,jalebi, pawbhaji Pawan juice bhandar
0141-3233029
27 Raj sahib jhalani
Chiken,samosa, ice-cream
a-2 block naya kheda
9314524713
28 Munnalal sharma
Ice-cream,toffee,tikki a-54 naya kheda
9314120532
29 Anurag g Lassi,cigrate,idli Shastri nagar jaipur
9314283399
30 Brajesh Choorma noodals,milk-shek
Vijay bihar colony naya kheda
9252594840
31 Shankar saini Milk,choclate,soft-drink Near the 9602861677
hanuman mandir ambabari
32 Netra pal singh
Coffee,kajoo,drink c-6manpur road shiv marg amb
9413932700
33 k.m agrawal Aalu’s paratha,rasmalai,barfi
c-5 shiv marg 9414369047
34 Rajiv bhardwaj
Kaju-katali,drink,samosa b-12 naya kheda
9252134811
35 Harshah kumawat
Matar paneer,egg,bread&butter
Near the mahendra public school
36 Ram singh Dal-roti,banana,juice 23 jagdamba colony
37 Ram nath gupta
Mung’halwa,gajak, dosa s-56 ambabadi
38 Abha gupta Namkeen,chocklate 110,vidhyadhar nagar
9214525501
39 Adarsh Drink,patiz 98870249140 Ashwani g Patiz,samosa,buscuit 925139387041 Sajjan
gautamNoodals,biscuit, choclate 9887511366
42 Jitesh Parikh Tea,juice,pawbhaji Near the biyani college
9799727502
43 Kapil sharma Dosa,cold-drink,chawmen 982833442244 Vijendra g Patiz,choclate,tea 988797559545 Himanshu Drink,noodals,bargar 9314873134
Sulabh gupta Cold drink choclate,patiz e-25 biyani college
9460118286
47 Deepak kathod
Hot-dog,halwa,patiz 9829607077
List of Products
SPECIMEN OF THE QUESTIONNAIRE
PROJECT
DECLINES FROM THE SECOND UNIT OF CONSUMPTION AND EXCEPTIONAL CASES MAY HAPPEN.
NAME OF CONSUMER: CONTACT NO: AGE OF CONSUMER : ADDRESS :OCCUPATION :
Q.1 WHICH THREE PRODUCTS OR COMMODITIES DO YOU LIKE TO CONSUME REGULARLY AT YOUR HIGH INTEREST ?
PRODUCTSNAME
Q.2 RANK THESE PRODUCTS OR COMMODITIES .
RANKING OF 1st 2nd 3rd
S.no.
1 Bear2 Juice4 Bhel puri5 Tea 6 Upma7 Apple8 Pani puri9 Rice10 Papaya11 Dal roti12 Coffee 13 Chawmeen 14 Gajak15 Gajar’halwa 16 Fruits
17 Dalbati18 Breads19 choorama20 Chocolates21 Paw bhaji22 Jalebi23 rasmalai24 Snacs25 Pizza26 Chicken27 Cigarettes 28 Phetha29 Kurkure30 Chole bhature31 Milk 32 cachori 33 Namkeen34 Kaju katali35 Paneer36 icecream37 Maggi38 Patties39 Banana40 Samosa 41 Patta ghobhi
PRODUCT
Q.3 SUPPOSE IN RANK NO. ONE/ TWO/ THREE PRODUCT OR COMMODITY YOUR SATISFACTION LEVEL ARE WITH A CONSUMPTION OF ONE UNIT IS 50. WHAT DO YOU FEEL ABOUT THE SECOND UNIT OF CONSUMPTION AND SO ON ?
RANKING OF PRODUCT
1st
RANKING OF PRODUCT
2nd
RANKING OF PRODUCT
3rd
UNITS MU UNITS MU UNITS MU
1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 6 6 6 7 7 7 8 8 8 9 9 9 10 10 10
COMMENTS / ANALYSYS
CONCLUSION
To get the very crux of any topic it is quite fruitful to practically apply that concept. The project of consumers’ survey regarding their taste and preferences developed a clear understanding of the topic There is a lot of learning involved in doing so and we also learned so many things while interacting directly with the consumers.
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