Question

explain how we can derive the demand curve from the consumers optimum concept

explain the concept of diminishing marginal utility in relation to the law of demand  

Answer 1

Consumer's optimum concept defines the amount that the consumer is ready to spend to achieve complete satisfaction from his given income. From this expenditure one can derive the demand prevailing in the market and hence the supply curve too.

The law of diminishing marginal utility defines that people are willing to spend less and less with the consumption an extra unit of the commodity. With this we can also deruve that the consumer is willing to spend lesser and lesser with higher commodity prices, where the law of demand states the same. With higher prices demand falls and lower prices demad rises. Therefore with higher prices the people would be less likely to buy the commodity more often.