Question

Evaluate the law of diminishing marginal utility.

Answer 1

Answer :-

Marginal Utility means that the additional satisfaction gained from consuming an additional unit of a good or service.

Law of diminishing marginal utility says, as the price decreases, the quantity demand increases, to a certain point. After that, each addition item is no longer useful. Marginal utility curve is a downward-sloping curve as shown in figure.

It states that marginal utility decreases as more of a good or service is consumed. The additional utility from consuming the first unit of the good or service is greater than the utility gained from the consumption of an extra unit.

There will come a point where consumption of the good or service fails to give utility (disutility) or zero MU.

The implication of this Law is that total utility increases at a decreasing rate as the consumer increases their consumption.