Which is the second rule of H. Η. Gossen ?

Question

Accepted Answer

The second rule of H. Η. Gossen is known as the "Law of Equi Marginal Utility," which is correctly identified as Option 2. This law is a fundamental principle in economics that describes how consumers allocate their resources to maximize total utility. According to this law, a consumer will distribute their income among various goods and services in such a way that the last unit of currency spent on each good or service provides the same level of marginal utility. In other words, the consumer achieves maximum satisfaction when the marginal utility per unit of currency is equalized across all goods and services.

### Explanation for Option 2: Law of Equi Marginal Utility

1. **Maximization of Utility**: The Law of Equi Marginal Utility is central to consumer behavior theory. It explains how consumers make decisions to maximize their overall satisfaction or utility. By equating the marginal utility per unit of currency across all goods, consumers ensure that they are getting the most value for their money.

2. **Rational Decision-Making**: This law assumes that consumers are rational and will adjust their consumption patterns to ensure that the marginal utility derived from each additional unit of expenditure is the same. This leads to an optimal allocation of resources.

3. **Economic Efficiency**: The principle of equi marginal utility is also important for achieving economic efficiency. It ensures that resources are allocated in a way that maximizes total utility, which is a key goal in economics.

### Explanation for Why Other Options are Incorrect

1. **Option 1: Law of Diminishing Marginal Utility**: This law states that as a consumer consumes more units of a good, the additional satisfaction (marginal utility) from each additional unit decreases. While this is a foundational concept in understanding consumer behavior, it is not the second rule of H. Η. Gossen. Instead, it is often referred to as Gossen's First Law.

2. **Option 3: Consumer Surplus**: Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. It is a measure of consumer benefit but is not related to Gossen's laws. It is more of a concept used in welfare economics to assess consumer benefits.

3. **Option 4: Law of Variable Proportions**: This law is related to production and describes how output changes as the proportion of inputs is varied. It is not related to consumer behavior or utility maximization, and thus, it is not relevant to Gossen's laws.

In conclusion, the Law of Equi Marginal Utility is the correct answer as it directly pertains to the second rule of H. Η. Gossen, focusing on the optimal allocation of resources to maximize consumer satisfaction.