Question

State and explain law of Diminishing Marginal Utility and explain its exceptions.

Answer 1

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Answer 2

Explanation:

The Law of Diminishing Marginal Utility explains that everything else equal as the consumption improves the marginal utility obtained from each decline in each extra unit. As an extra unit is consumed, marginal utility is obtained as the shift in utility. Utility is an economic word used to depict the happiness or fulfillment.

Exception to the law are

1. Homogeneous commodity -The law of decreasing marginal utility assumes that with homogeneous units there should be a single commodity. All product units should have the same size and quality. If the units are not the same, it will not apply this law.
2. No change in the consumer's tastes and earnings - There should be no change in the consumer's tastes, practices, customs, and earnings. If a consumer's revenue rises, a certain commodity's marginal usefulness will improve. In such cases, higher consumption may result in higher fulfillment or usefulness.