Question

Explain the difference between the Law of Diminishing Marginal Utility and the Law of Diminishing Marginal Rate of Subsitution?

Answer 1

1.First of all it should be understood that utility means satisfaction

so law of diminishing marginal utility says that as there is more consumption of any good or services then utility derived from each next consumption decreases

It is the utility that is the incremental increase in the utility that results from consumption of one additional unit

it may go to negative value as well

2.but when we talk about marginal rate of substitution then we are considering two type of goods which means for getting one good the other good has to be sacrificed

Or we can say that what is the amount of good that a consumer is willing to consume in relation with the another good

here in difference theory works