DIMINISHING MARGINAL UTILITY

The satisfaction that the people derived from the consumption activity is called utility.

Marginal utility is additional utility that is derived from consumption of one extra unit of goods or service.

According to Alfred Marshall the law of diminishing marginal utility is defined as follow:-

“During the course of consumption as more and more units of a commodity are used, every successive Unit gives utility with a diminishing rate provided other things remaining the same.”

We can briefly explain Marshall theory with the help of example. Suppose we are very hungry and when we eat first chapatti we get a greater satisfaction (i.e 10 unit). In second chapatti or satisfaction decreases (i.e. 16 unit) and after eating few more chapattis we started feeling like vomiting i.e our marginal utility becomes negative

Therefore, the above example Prove the law of diminishing marginal utility.

Schedule of Law of DMU

Unit consumed	Marginal utility	Total utility
1	25	25
2	20	45
3	15	60
4	10	70
5	05	75
6	00	75
7	-05	70

With the help of schedule we have made the following diagram.

However there are some exceptions to this law:

• use of wisky
• want of money
• collection of precious things, etc.