According’s to
economics utility of the goods and services is the value and usability of that
product. It’s all
about the customers’ needs and demands and their satisfaction. If any consumer
love or satisfied by any goods and services, then he will consume more and
more. So from here marginal utility came to existence It means, the additional benefit or satisfaction a
consumer get by consume the extra 1 unit of that goods and service.
Just imagine
you love sweets a lot and you got a chance to eat as many as sweets you want
for free. When you will eat your 1st
sweets it will give you pleasure or satisfaction and your desire to consume more
sweets will increase. But once you fully satisfy then your desire to consume
more sweets will decrease. So from this example we can derive that what is diminishing marginal utility.
Diminishing marginal
utility means the 1st unit of consumption of any goods and service
when the satisfaction level will decrease for that goods and service.so that it impacts a lot to the customer and consumer both. when a producer produces similar type of product repeatedly and don't change the taste and utility of the goods. Then customers want new thing because their utility decreases by use more and more.
There is the assumption of utility that tastes and preference of consumer doesn't change . But its practically impossible for all consumer so producer should think about it and should change the product according to customer otherwise the consumption of the goods will decease after a certain time.
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