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: maism@datainfosys.net 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.