What are the reasons behind the operation of law of diminishing marginal utility
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Answer:
Three important causes of the diminishing marginal utility are:
1. Satisfaction of a Particular Want:
Although human wants are unlimited, a particular want is limited. So it can be satisfied. As a person consumes more and more of a commodity, his indication becomes less and less. So his marginal utility from the successive units becomes gradually smaller. It means that too many units of a commodity bring complete satisfaction.
2. Introspection:
The validity of the law can be established through introspection (i.e., an examination of one’s own thought or mental reaction). The classical economists used to look into their minds for their own psychological reaction to the extra consumption of a particular thing (say, an apple, an ice-cream, a chocolate, etc.) and tested the truth of the law.
3. Less Important Uses of Additional Quantities:
Furthermore, marginal utility diminishes because a person, having several units of a commodity capable of alternative uses, puts one unit to its most important use and the additional units to the successively less important uses.
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