Question

Answer the following questions.
What are the limitations / Shortcomings of the law of DMU ?

Answer 1

Limitations of the law of DMU are:

• It is assumed that the tastes, habits, fashion, and income remains constant. But this is not true realistically.
  
• Income of the consumer is assumed is constant which doesn’t happen and thus he shifts to another good but this is not taken into consideration.
  
• It cannot be applied to goods like television and ACs, where there is no decrease in their marginal consumption.
  
• It focuses on goods which are assumed to be exactly same and gives the same level of satisfaction. Again this is not possible realistically.