UTILITY :-
The state or condition being useful is called as utility.
According to Prof.Hibden " Utility is the ability of a good to satisfy a want".
If a person consumes any good or service the amount of satisfaction or satisfying capacity which he derives from that good or service is known as utility.
MARGINAL UTILITY:
Marginal utility means additional satisfaction.If a consumer is deriving satisfaction by consuming a commodity the extra or additional satisfaction which he derives after consuming one more commodity is called as marginal utility.
LAW OF DIMINISHING MARGINAL UTILITY:
Additional satisfaction derived after consuming additional unit of commodity is called as marginal utility. If the additional units increases one by one then the amount of satisfaction derives decreases. Hence marginal utility diminishes. The more the additional units,the less the satisfaction level.
Utility diminishes over time. The diminishing marginal utility depends on individual tastes and preferences, so it differs from consumer to consumer.
EXAMPLE OF LAW OF DIMINISHING MARGINAL UTILITY:-
If a person is fond of ice creams he starts consuming ice creams for first ice cream his satisfaction level will be high it continues for three to four ice creams as he is fond of them. Later the satisfaction level will not increase for sixth and seventh ice cream his satisfaction levels starts decreasing.Gradually it falls down if he consumes more and more.Marginal utility starts diminishing.
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