Question

Answer the following questions.
Explain the law of diminishing marginal utility.

Answer 1

• Law of Diminishing Marginal Utility (DMU) states that as we consume more and more units of a commodity, the utility derived from each successive unit goes on decreasing.
• People spend their income on various goods because consuming more and more of any one good reduces the marginal satisfaction obtained from further consumption of the same good.
• Law of DMU has universal applicability and applies to all goods and services.