Law Of Diminishing Marginal Utility

Question 1

Law information

Answer 1

First proposed by Prof sir gossen
Discussed in detail by Prof Alfred Marshal in his books ‘Principles of Economics ‘~1890

Question 2

Statement of law

Answer 2

According to Prof. Alfred Marshall, “Other things remaining constant, the additional benefit which a person derives from a given increase in his stock of a thing, diminishes with every increase in the stock that he already has.”

Question 3

Explain statement of law in short

Answer 3

The more of a thing you have, the less you want to have it

Question 4

Assumptions

Answer 4

RCHCRCDS
RATIONALITY
CARDINAL MEASUREMENT
HOMOGENEITY
CONTINUITY
REASONABILITY
CONSTANCY
DIVISIBILITY
SINGLE WANT

Question 5

Exceptions

Answer 5

HMAPM
HOBBIES
MISER
ADDICTION
POWER
MONEY

Question 6

Criticism

Answer 6

Unrealistic assumption(all the points from assumptions)
Cardinal measurement(point from assumptions)
Single want( Point from assumptions)
Constant marginal utility of money( point of constancy from assumption)
Indivisible goods(point of divisibility from assumptions)

Question 7

Significance

Answer 7

Useful, basis
Usefulness to the consumer
Useful to the govt
Basis of paradox of values
Basis of law of demand

Question 8

Features Of Utility

Answer 8

Relative concept
Subjective concept
Ethically neutral concept
Basis of demand
Differs from usefulness
Differs from pleasure
Differs from satisfaction
Measurement of utility is hypothetical
Is multipurpose
Depends on the intensity of want