Law of substitution:-

The law of substitution is fully based upon the law of diminishing marginal utility.Thus,law was propounded by the famous Austriam economist Herman Hen Serich Gossen in the nineteenth century.For this reason this law is also known as second ;law of Gossen .But many economist have taken this law of Gossen as the law of substition.This law point out how a consumer can get manimum satisfaction out of given expenditure on different goods.We have presumed that every consumer spends his money income on different goods not in a haphazard number but with a clear idea of manimizing his satifactioin.

It is clearly that human wants are unlimited and the resource fulfulling these wants are limited.According to the law of diminishing marginal utility,if a consumer is to use all the available resource in the consumption of a single commodity then marginal utility,derived from every additional unit will decrease successively.