Question

law of diminishing marginal utility is important in practice. agree or disagree​

Answer 1

Answer:

The law of diminishing marginal utility states that: “As a consumer consumes more and more units of a commodity at succession, the marginal utility derived from the consumption of each additional unit of the commodity falls.” The law of diminishing marginal utility is based on the following assumptions.

Explanation:

       To the consumer - The law of diminishing marginal utility guides the consumer in planning their budget, so as to achieve maximum satisfaction from the resources available.

2.       To the producer - The law is important to the producer in determining price and sales policy. It helps to maximise his profits.

3.       To the monopolist - The law of DMU is helpful to the monopolist to practice price discrimination, i.e., charging different prices to different consumers for the same product.

4.       To the government - The law of diminishing marginal utility is useful to the government to implement various economic policies like public distribution system, social justice, etc. It helps to improve the welfare of the people in the society.

5.       To the finance minister - The law of diminishing marginal utility guides the finance minister to frame progressive taxation policy. It helps to reduce economic inequality. The law is also useful to economic experts, bankers and modern economists.