Why law of diminishing marginal utility a reason for downward sloping of demand curve?

Question

Answer

Because the marginal utility curve slopes downward.Also the MU curve is compared with demand curve because as more and more satisfaction less will be its utility

Answer

Because the utility derived from every excess unit consumed goes on decreasing

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Marginal utility is that which comes from consumption of extra 1 unit of a commodity.Since a person consume more a commodity  then his utility fall of that commodity.It is called diminishing marginal utility. so if we consume a particular good more and more then our marginal utility of that commodity will diminish.That's why diminishing marginal utility curve downward sloping.

Answer

Introduction:
The law of diminishing marginal utility states that as a consumer consumes more units of a particular good or service, the additional satisfaction or utility derived from each additional unit decreases. This principle plays a crucial role in explaining the downward sloping nature of the demand curve.

Law of Diminishing Marginal Utility:
The law of diminishing marginal utility is based on the concept of limited wants and the finite capacity of individuals to derive satisfaction from consuming goods and services. Initially, when a consumer starts consuming a good, the first unit provides the highest level of satisfaction or utility. However, as the consumer continues to consume more units of the same good, the marginal utility derived from each additional unit decreases. This is because the consumer's wants are fulfilled to a certain extent, and the additional units of the good provide less satisfaction compared to the previous units.

Impact on Demand:
The law of diminishing marginal utility directly affects the demand for a good or service. Here's how it leads to the downward sloping nature of the demand curve:

1. Satiation: As a consumer consumes more units of a good, the level of satisfaction derived from each additional unit decreases. Eventually, the consumer reaches a point of satiation where the marginal utility of consuming one more unit becomes negative. At this point, the consumer no longer desires additional units, leading to a decrease in demand.

2. Substitution Effect: The law of diminishing marginal utility also highlights the consumer's tendency to substitute a good with a lower marginal utility for one with a higher marginal utility. As the consumer consumes more units of a good, the marginal utility of that good decreases, making other goods relatively more attractive. This leads to a decrease in demand for the original good and an increase in demand for substitutes.

3. Income Effect: The law of diminishing marginal utility implies that as a consumer consumes more units of a good, the consumer's willingness to pay for each additional unit decreases. This reduction in willingness to pay translates into a decrease in the consumer's demand for the good, as the consumer becomes less willing to allocate their limited income towards purchasing more units.

Conclusion:
The law of diminishing marginal utility provides a logical explanation for the downward sloping nature of the demand curve. As consumers consume more units of a good, the satisfaction derived from each additional unit decreases, leading to a decrease in their willingness to pay and overall demand for the good. The law highlights the concept of limited wants and the substitution and income effects that influence consumer behavior.

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