Question

describe law of diminishing marginal utility , its limitations and importance...​

Answer 1

Answer :

The law of diminishing marginal utility says that the marginal utility from each additional unit declines as consumption increases. The marginal utility may decrease into negative utility, as it may become entirely unfavorable to consume another unit of any product.

Here are some main limitations of Law of Diminishing Marginal Utility :

• Measurability of utility.
• Abnormal persons.
• Initial stages.
• The law depends on the supply of the substitutes and complements.
• The law is not applicable in case of rare connections.

This law is useful to consumer because by consuming the more units of commodity, satisfaction starts to decline. On the basis of the law consumer spends his/her money to purchase suitable quantity of commodity which maximizes his/her satisfaction.

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