State and explain the law of deminishing merginal utility with the help of diagram
and also it's limitations of law
Answers
The below mentioned article provides an overview on the Law of Diminishing Marginal Utility.
One of the characteristics of human wants is their limited intensity. As we have more of anything in succession, our intensity for its subsequent units diminishes. This generalization of satiable wants is known as the Law of Diminishing Marginal Utility.
Hermann Heinrich Gossen was the first to formulate this law in 1854 though the name was given by Marshall. Jevons called it Gossen’s First Law.
Gossen stated it thus:
“The magnitude of one and the same satisfaction, when we continue to enjoy it without interruption, continually decreases until satiation is reached.”
Taking the example of apples as shown in column (3) of Table 1, when our hypothetical consumer takes the first apple he derives the maximum satisfaction in terms of 20 utils. As he continues to consume the second, third and the fourth units in succession, he derives less and less satisfaction 15, 10 and 5 utils respectively.
With the consumption of the 5th apple he reaches the satiety point because the satisfaction derived from