Question

State with reason whether you agree or disagree.
Law of DMU is important in practice.

Answer 1

The practical significance of the law of DMU:

• It helps the finance minister and other ministers in the formulation of various economic policies. It also helps explain the tax difference in the income of the rich and poor.
  
• It helps the producer to maintain an appropriate level of stock and vary his sales accordingly.
  
• It helps in understanding consumers’ perceptions and their behaviour and consumption habit.