law of diminishing marginal utility
Answers
Suppose you are having pizza , the first slice of pizza gives you some satisfaction . When you eat next piece of slice , you get more satisfaction...After having 3 or 4 slice of pizza , you will find that your satisfaction starts decreasing...Forr this word ' satisfaction ' we have a term in Utility Analysis as " Utility "...
Simply we can say , When more n more commodities of goods are consumed , satisfaction by consuming these commodities tends to fall or decrease...This is law of diminishing marginal utitlity...
Marginal uitility is change in total uitility when one addition or more commodity of good is consumed...
Law of Diminishing Marginial states that When more and more commodities of good are consumed , marginal utility tends to fall or decreses....
You can understand this with the help of combined graph of Total Utility ( TU ) and Marginal Utility ( MU )
See in the graph, Initially TU increases with increasing rate , Marginal uitity tends to fall. When TU is maximum , MU become Zero . After this TU starts decreasing with decresing rate and MU become negative..
The essence of the law of diminishing marginal utility is quite simple to understand and it's working.
EXPLANATION -
It is one of the important law in the economy to understand How the consumer buy capabilities work.
The law of Diminishing utility says that the consumption of one add on a unit of the commodity leads to less satisfaction and at one point to becomes zero and starts to fall in negative measurement.
So, when we talk about the essence of the law of Diminishing utility is how the satisfaction of the consumer starts decreasing as it starting consumers every other commodity unit.
Hence, the law of Diminishing utility talks about the relationship between commodity consumption and the satisfaction derived from it.
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