What is law of diminishing marginal utility?

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Answer

The Law Of Diminishing Marginal Utility states that all else equal as consumption increases the marginal utility derived from each additional unit declines.
Utility is an economic term used to represent satisfaction or happiness.

Answer

Law of diminishing marginal utility states that as we consume more and more units of a commodity,the utility derived from each successive unit goes on decreasing.

Answer

Law of Diminishing Marginal Utility

The law of diminishing marginal utility is an economic concept that states that as an individual consumes more and more units of a particular good or service, the satisfaction or utility derived from each additional unit decreases. In other words, the law suggests that the more of a good or service a person consumes, the less satisfaction they will derive from each additional unit.

Key Points:
- Utility refers to the satisfaction or pleasure that individuals derive from consuming a good or service.
- The law of diminishing marginal utility is based on the assumption that human wants are insatiable and that individuals have a limited capacity to derive satisfaction from consuming goods and services.
- The law applies to both goods and services, as well as tangible and intangible products.
- The law of diminishing marginal utility helps explain consumer behavior and preferences.
- The law is based on the concept of marginal utility, which refers to the additional utility gained from consuming one additional unit of a good or service.
- Marginal utility is subjective and varies from individual to individual.
- The law of diminishing marginal utility suggests that as consumption increases, the marginal utility derived from each additional unit decreases.
- This means that individuals are willing to pay less for each additional unit consumed.
- As a result, demand curves for goods and services slope downward, reflecting the diminishing marginal utility.
- The law of diminishing marginal utility is an important concept in economics as it helps explain consumer choices, price determination, and the concept of diminishing returns.
- It also provides insights into the optimal allocation of resources and the efficiency of markets.

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