The Law of diminishing marginal utility.
The Law of diminishing marginal utility. The Law of diminishing marginal utility is one of the most important and fundamental laws of economics.
According to Alfred Marshall,
"The Law of Diminishing Marginal Utility is defined as the additional utility which a person derives from an increase of his stock of a commodity diminishes with every increase in the stock that he or she already has."
If other things remain the same, So we use different units of an item one by one utility from every other unit, decreases compared to the first unit.
OR
When an item is used continuously So the utility of each additional unit decreases compared to the first unit, This behavior is known as,
"The Law of diminishing marginal utility '.
Explanation:
suppose that if a person continuously eats 6 biscuits, the first biscuit is will be a source of great satisfaction, In other words, it will yield great utility, the second biscuit will give him less satisfaction than the first one, and the third less than the second one and so on, and then the six biscuits he will perhaps not be ready to eat and the utility of the 5th biscuit thus will be zero, and the sixth one diminishes his utility.
Schedule:
Units. Marginal utility.
1 12
2 9
3 6
4 3
5 0
6 -3
Diagram:
