Question

Which of the following is a limitation of law of diminishing marginal utility?

• A. Marginal utility in certain cases may increase rather than decrease, e.g. consumption of wine by a drunkard.
• B. Utility is not quantifiable, i.e., it cannot be measured.
• C. Consumer does not consume only one commodity in real life. He has to attain equilibrium by consuming a large number of goods and services.
• D. All of above.

Answer 1

Answer: (D)

All of above.

• There are various exception to the law of diminishing marginal utility like in case of money.
  
• We cannot measure our satisfaction in cardinal numbers, we can only measure it as high or low depending upon the product.
  
• Consumers consume various commodities, therefore even if the utility of a commodity is high the consumer can switch to some other similar product whose price is low to attend equilibrium. So the consumer anyway attains equilibrium due to feasibility to various products.