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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 totalutility with that unit.
In that case, the "law" of diminishing marginal utilitywould 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.
What else can I help you with?
Criticism of law of diminishing marginal utility?
the criticisma of the law of diminishing marginal utility
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:What_is_the_difference_between_equi-marginal_utility_and_diminishing_marginal_utility
Explain the merits and demerits of law of diminishing marginal utility?
explain the demerits of diminishing marginal utility
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 consumption of a good decreases, its marginal utility goes on increasing.
If marginal utility is positive but diminishing then?
Total utility increases at a diminishing rate
How does an individual or household benefit from the law of diminishing marginal utility?
what is it marginal utility
What is a sentence with marginal utility?
The expected marginal utility of the next unit of water is diminishing.
What is marginal utility. why marginal utility diminishing. give atleast 10 examples where the marginal utility have not diminising?
Life-saving procedures
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 consuming goods. diminishng marginal return & Diminishing marginal utility is same.
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.
Increasing marginal utility of goods?
Not possible. Law of Diminishing Marginal utility states that equal additions to a good provide smaller and smaller increases in utility, therefore marginal utility decreases.
What is total utilitymarginal utility d low of diminishing marginal utility and draw the thoeretical mathematical diagramatically relationship between total and marginal utility?
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