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# What is the law of diminishing marginal utility?

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In its most general form, the "law" of diminishing marginal utility states that, in the absence of "tipping points", as increasing amounts of a good or of a service are consumed, past some point of consumption the utility (usefulness) of successive increases drops. This is follows from an assumption that economic actors are rational, and therefore put each available amount to the best possible use, so that (on the assumption that there is no tipping point) the next available amount must then go to a less important use.

In mainstream economics, it is often assumed that utility can be quantified. In that case, the marginal utility would be an actual arithmetic difference. To get the marginal utility of the nth unit of a good or service, one could subtract the total utility without that unit from the total utility with that unit.

In that case, the "law" of diminishing marginal utility would imply that these arithmetic differences became ever smaller quantities. Here's a purely hypothetical example:

Quantity of Good . Total Utility . Marginal Utility
... ... ... ... 0 ... ... ... ... ... ... ... 0 ... ... ... ... ... ... undefined
... ... ... ... 1 ... ... ... ... ... ... . 10 ... ... ... ... ... ... 10
... ... ... ... 2 ... ... ... ... ... ... . 19... ... ... ... ... ... ... 9
... ... ... ... 3 ... ... ... ... ... ... . 27... ... ... ... ... ... ... 8
... ... ... ... 4 ... ... ... ... ... ... . 34... ... ... ... ... ... ... 7
... ... ... ... 5 ... ... ... ... ... ... . 40... ... ... ... ... ... ... 6
... ... ... ... 6 ... ... ... ... ... ... . 45... ... ... ... ... ... ... 5

If marginal utility diminishes asymptotically, as in this hypothetical sequence

MU = 16 , 8 , 4 , 2 , 1 , .5 , .25 , .125 , ...

then total utility may always grow (though its growth may become very slow). On the other hand, when there can be "too much of a good thing", so that a good becomes a bad when there's too much of it, then marginal utility can become negative, and total utility can actually shrink with additional units. Continuing the first hypothetical example:

Quantity of Good . Total Utility . Marginal Utility
... ... ... ... 5 ... ... ... ... ... ... ... 40... ... ... ... ... ... ... 6
... ... ... ... 6 ... ... ... ... ... ... ... 45... ... ... ... ... ... ... 5
... ... ... ... 7 ... ... ... ... ... ... ... 49... ... ... ... ... ... ... 4
... ... ... ... 8 ... ... ... ... ... ... ... 52... ... ... ... ... ... ... 3
... ... ... ... 9 ... ... ... ... ... ... ... 54... ... ... ... ... ... ... 2
... ... ... . 10 ... ... ... ... ... ... ... 55... ... ... ... ... ... ... 1
... ... ... . 11 ... ... ... ... ... ... ... 55... ... ... ... ... ... ... 0
... ... ... . 12 ... ... ... ... ... ... ... 54... ... ... ... ... ... -1
... ... ... . 13 ... ... ... ... ... ... ... 52... ... ... ... ... .... -2
... ... ... . 14 ... ... ... ... ... ... ... 49... ... ... ... ... ... -3
Law states that for any good or service, the marginal utility of that good or service decreases as the quantity of the good increases, ceteris paribus. In other words, total utility increases more and more slowly as the quantity consumed increases.
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# Is it any good service or activity which does not eventually exhibit diminishing marginal utility per unit of time?

Answer . When the phrase 'insatiable appetite' is used to refer to any activity, and we are reasonable confident that it is relevant and applicable to that activity, then we could begin a critical investigation of whether the law applies to it or not. One activity that immediately comes to mind (MORE)

# What is marginal utility?

Marginal utility is an economic concept that determines how much ofan item a consumer will buy. Positive marginal utility happens whenthe consumption of the additional item increases. On the otherhand, negative marginal utility occurs when the consumption ofadditional item decreases.

# Aassumptions of diminishing marginal utility?

Auuumptions: This law is based on following assumptions and this law is applicable only if these assumptions are true. There are following: 1: Continuous use: It is assumed that the unit of commodity should be used continuously. If there is interval between the consumption of the same units then (MORE)

# Law of equi marginal utility?

Definition: prof. Alfred Marshall has stated the law as follows- a person has a thing which can be put to several uses he will distribute it between these uses in such a way that it has the same marginal utility in all. Explanation: In other words he will substitutes a commodity of greater utility (MORE)

# What is Law of Diminishing Marginal Returns?

the characteristic of any production system in which increases in variable inputs result in increasing reduction of total output. An indicator of when to stop making additional inputs to the system, when the input exceeds the additional output.

# What are the importances of law of diminishing marginal utility?

The importances of law of diminishing marginal utility are given below: a) use in consumption b) use in production c) use in exchange d) use in distribution e) use in public finance.

# Why does marginal product eventually diminish?

Marginal product eventually diminishes because the cost of doingbusiness increases with production. The company would need to makea change in the organization so that they can shift theirproduction possibilities.

# What is diminishing marginal productivity?

What it comes down to is too many workers, not enough resources for them all to use at the same time to be productive, thus resulting in the decline of production.

# Examples of law of equi marginal utility?

Consumers Equilibrium through Law of EquiMarginal Utility The Law of Equi-Marginal Utility is an extension to the law of diminishing marginal utility. The principle of equi-marginal utility explains the behavior of a consumer in distributing his limited income among various goods and services. (MORE)

# What is the law of diminishing marginal product?

The law of diminishing marginal product states that as a firm uses more of a variable resource with a fixed resource and fixed technology, the marginal product of the variable resource will fall. From related site.

# Equi marginal utility?

Equimarginal utility principle states that to maximise the utility, a rational consumer spends his budget on consuming the amount that gives him the highest marginal utility per dollar for each commodity. For example, say Tom has a budget of \$5. He has two commodities to choose from- a pen and an (MORE)

# What are the importance of equi marginal utility?

The importance of the equi marginal utility is that it is used as abasis for the progressive taxation. The other importance is that itis used in the redistribution of income.

# Clearly differentiate between diminishing marginal utility and diminishing marginal returns?

utility: means a level of satsfection.. marginal utility:an extra unit gain my consumer/consumation of addational unit.. deminishing marginal utility:when a person reachs his max level of satsfection by consuming a specific product then his utility will be falling by incresing the rate of consumin (MORE)

# What is equi-marginal utility?

This Theory was propounded by H.H Gossen and called Gossen second law and developed by Alfred Marshall and all the credit is given to Alfred Marshall. This theory states that a retoinal consumer spend his total budget between among the goods he will derived the satisfaction from the additional goods (MORE)

# What are some exceptions to the law of diminishing marginal utility?

1. No limit of knowledge. 2. Law does not apply on hobbies. 3. Social status (Human ego). 4. Does not apply on money or wealth. the diminishing marginal utility law fails under certain vocation. following are the points where the this law fails. 1. in knowledge this law fails because any one w (MORE)

# In economics what is the diminishing marginal rate of substitution?

The hypothesis that the loss of one commidity that is presently being cosumed by a household.the less willing willthe household be to give up a unit of that commidity to obtain an additional unit of a second commidity.

# What is Law of Equi-Marginal Utility?

Law of Equi-Marginal Utility explains how a consumer can get maximum satisfaction out of his expenditure on different goods.

# When do diminishing marginal returns occur?

Diminishing returns occur when a function satisfies Innada conditions or, to be more specific, when: . The first derivative of the function is positive . The second derivative of the function is negative. Diminishing describes the tendency of increases in returns to decline asymptotically (MORE)

# What is Diminishing marginal utilty?

The more you consume, the less satisfaction you derive from each addition unit. Say you order a pizza. The more slices you eat, the more full you become. Thus, the marginal utility you receive from each additional slice is diminishing.

# What is marginal utility and total utility?

Total utility is the overall utility achieved by using any productwhile marginal utility is the increase/decrease in utility from useof one more unit of product.

# Total utility vs marginal utility?

Total utility is the total utility of usage of product whilemarginal utility is the difference between utility for first unitof use and next unit of use.

# Diminishing marginal returns to scale?

What Does Law of Diminishing Marginal Returns Mean? A law of economics stating that, as the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee.. Investopedia explains Law of Diminishi (MORE)

# What the law of equalising weighted marginal utilities mean?

This is the law that represents the consumer equilibrium when theyhave more than one of a product. The customer will slowly want theitem less the more of it they get.

# What are the Limitations and importance of the law of diminishing marginal utility?

1:income of consumer do not remain constant for a every long time 2:price of the commodities change from time to time 3:taste of the consumers varies with time 4:the principle on which the consumer decide to spend the given amount will also get affective

# Why does marginal utility decrease?

Law of diminishing marginal utility states that equal additions to a good provide smaller and smaller increases in total utility, therefore marginal utility decreases.. Lets use apples for an example. The first apple is very satisfying and adds a lot of utility, say 100 total utility. If you have a (MORE)

# What is the difference between equi-marginal utility and diminishing marginal utility?

What is the difference between equi-marginal utility and diminishing marginal utility? . Read more: http://wiki.answers.com/Q/What_is_the_difference_between_equi-marginal_utility_and_diminishing_marginal_utility#ixzz2V2tPOKVE .

# What are the assumptions of the law of diminishing marginal utility?

An assumption is that as you consume more and more of a good the marginal utils will decrease with every additional unit. Utils measure consumers happiness level. If you had one ice cream you would be very happy, if you had two ice creams you would be happy, if you had three ice creams you would fee (MORE)

# Law of equal marginal utility?

The Law of Equi-Marginal Utility is an extension to the law of diminishing marginal utility. The principle of equi-marginal utility explains the behavior of a consumer in distributing his limited income among various goods and services. This law states that how a consumer allocates his money income (MORE)

# Example of the law of diminishing marginal productivity?

An example of it is, when you know the notes to sing. You can sing most anything! Together!

# What does the law of diminishing marginal utility stands for?

This law states that with the additional consumption the satisfaction decreases. Let's take an example: Suppose you are famished and you are offered five bread pieces. The first piece of bread will give you utmost satisfaction. But the satisaction level goes down with the very piece of next bread. A (MORE)

# The law of diminishing marginal utility explains why A supply curves slope upward B demand curves slope downward C drug addicts can never get enough D. people will only consume their favo?

B. Demand curve slopes downward. If apple #3 doesn't give you as much satisfaction (or utility) as apple #2, your demand for apples goes down before you hit apple #4.

# How is the principle of diminishing marginal utility is related to the downward-sloping demand curve?

Diminishing marginal utility implies that, for each unit of production consumed, utility is increasing at a decreasing rate. Therefore, a consumer's greatest utility gain is always at the first unit of a good and then steadily falls to 0 as they approach infinity. A consumer's willingness to pay for (MORE)

# Describe how the slope of the demand curve can be explained by the principle of diminishing marginal utility?

People only need so much of one thing. The lower the price the moredemand you will have for the product, until the customer does notwant anymore. At that time it will not matter what the price is,they will not purchase any more.

# Why does the marginal rate of substitution diminish?

As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumpti (MORE)

# How does diminishing marginal utility affect demand?

Well diminishing marginal utility basically states that when a person constantly consumes the same product each time they will become less and less satisfied. So diminishing utility will cause a decrease in demand.

# What is the law of diminishing of marginal utility?

The Law of Diminishing Marginal Utility The law of diminishing marginal utility can be logically deduced from the axiom of human action. To show this, let us start with some remarks on utility. Utility is a subjective concept. It denotes "satisfaction" (or "happiness" or "contentment"). It rises (MORE)

# Why does marginal utility slope downward?

Marginal utility slopes downward due to two assumptions: 1) Marginal utility satisfies Innada conditions [mathematical component]. 2) Marginal utility is diminishing [economics component]. This means as a person consumes more of a good, their change in utility > 0 but is decreasing. As consumption - (MORE)

# Can marginal utility increase?

Yes. Let's say I need \$5 for a cheeseburger, but I only have \$4. the marginal utility of dollars 1,2,3, and 4 is zero, because none of them allow me to buy the cheeseburger. That fifth dollar, however, has an entire cheeseburger's worth of utility in it.

# Define diminishing marginal product of capital?

Diminishing marginal product of capital is an economic principlethat refers to the concept that when the input is increased and theother inputs are kept at the same level than it may initiallyincrease output. However, if the inputs continue to increase withno other changes there may be limited effec (MORE)

# What is law of equi marginal utility and explain with the help of schedule and diagram?

Law of equi marginal utility refers " How a Consumer get Maximum Satisfaction From Various Commodities " The Last Unit \ Penny of all the Goods Are Equal .

# Law of diminishing marginal utility conclusion?

As a conclusion, utility is based satisfaction or benefits thatcustomers enjoyed by consumers on particular goods and services.Human has feels which separate us from other living being. When weconsume a goods and services in larger quantity, we will get boredsoon towards the product as we reach towa (MORE)

# How does the principle of diminishing marginal utility explain the slope of the demand curve?

The principle of diminishing marginal utility explains the slope of the demand curve by letting us be able to see which direction the slope is in, which is always downward.

# What does the law of marginal diminishing utility say?

That the more times one uses an object or item, the less enjoyment (utility) he/she gets out of it. For example if you were to eat pizza every night, the marginal law of diminishing utility says that you would slowly lose enjoyment from it and would most likely be sick of it pretty soon

# Importance of law of diminishing marginal utility?

The Law of Diminishing Marginal Utility is also known as the law ofconsumption, by which less satisfaction is derived as more units ofan asset are consumed. This principle is very important inunderstanding value in economics.

# What is the definition of Law of Diminishing Marginial Utility?

In economics, the marginal utility of a good or service is the utility gained (or lost) from an increase (or decrease) in the consumptio...

# Write a statement that best illustrates the concept of diminishing marginal utility?

The more bags of potato chips a person eats, the less additional satisfaction the person gets from eating another bag.

# How does the diminish marginal utility and price of superior goods determine negative slope in demand curve?

1. because of substitution effects: When the price of a commodity falls, it become relatively cheaper than other commodities. This induces the consumer to substitute the commodity whose the price has fallen for other commodities, which have now become relatively expensive 2. Income Effect: When th (MORE)

# Where is it possible to learn about marginal utility?

Marginal utility is a term used in the field of economics.In very basic terms it relates to the gain or loss resulting from increased or decreased consumption.For full information one can use sites such as investopedia or merriam-webster.

# How does the law of diminishing marginal productivity affect the cost of productions?

When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.

# What does a marginal utillity curve shows?

It shows how much utility you would get for each unit ofconsumption. It has a positive slope that decreases as the unit ofconsumption increases due to the law of diminishing returns.