Law
of diminishing marginal utility
Law of diminishing marginal utility is based on three
facts-
- Firstly total wants of a person which is unlimited but each single want can be satisfied. As a person gets more and more commodities, the desire of a person towards the commodity falls down. After a point is reached the person no longer wants the goods anymore.
- Secondly some goods are not a perfect substitutes for each other in the satisfaction of other particular wants. As the number of goods of a specific category increases the marginal utility will decrease.
- Thirdly the marginal utility of money is constant given the consumer’s wealth.
For example,
When I went to a restaurant on my
friend’s birthday, as I am a pure vegetarian I don’t get much varieties in
vegetarian in starters except paneer. As I have ordered paneer tikka because of
no options, as all of my friends were non vegetarians they didn’t preferred to
have vegetarian. So I has to complete the whole plate of paneer tikka alone, I had
a piece of paneer tikka, as it was a first piece I liked it which was very
delicious, then I was thinking that I can complete the whole plate, but as soon
as I had two or three pieces more, I lost my interest to have it. But I tried
to complete the full plate of paneer tikka, but finally left some pieces of
paneer tikka as I lost my interest towards it.
This is a example of law of
diminishing marginal utility as having more quantity than the level where
desire is fulfilled, utility towards the good decreases by consuming more
goods.
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