Diminishing Marginal Utility Curve

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Diminishing Marginal Utility Curve In this figure 5.2, a curve MU has been drawn which slopes downward from left to right. This is the diminishing marginal utility curve. It shows that -as the quantity of (he commodity with the consumer increases, its marginal utility decreases. When he has OM, quantity, the marginal utility is M, Q and when the quantity increases […]

Limitations of the Law

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Limitations of the Law The Law of Diminishing Marginal Utility, as enunciated above, is based on certain assumptions: (i) Suitahle Units. It is assumed that the commodity is taken in suitable units. If you begin taking water by spoonfuls when thirsty, or if you want to judge the utility of the morsels rather than the full chapatis, your thirst or […]

Utility Analysis of Demand

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Utility Analysis of Demand Marshall states the law thus: The additional benefit which a person  rives (rum a fen increase of his stock of a thing diminishes with every creative in stock that  already has.We might add that with every diminution of his stock. the marginal utility will go on increasing. In other words, the marginal utility varies inversely with the stock, […]

LAW OF DIMINISHING MARGINAL UTLITY

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LAW OF DIMINISHING MARGINAL UTILITY Satisfaction of human wants follows some very important laws and one of them is the Law of Diminishing Marginal Utility. Tile law refers to the common experience of every consumer. Suppose ‘a person starts eating pieces of bread one after another. The first toast gives him great pleasure. By the time e starts taking the second, the […]

Utilities are Independent

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Utilities are Independent Marginal utility analysis assumes that the utilities of different commodities are independent 01 one another. That is, the utility of one commodity docs not in any way affect that of another. In other words, the satisfaction derived from the consumption of one good is the function of that good alone and is not affected by the consumption of […]

BASIC ASSUMPTIONS OF MARGINAL UTILITY ANALYSIS

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BASIC ASSUMPTIONS OF MARGINAL UTILITY ANALYSIS We shall first mention a few basic assumptions on which the marginal utility analysis is based. We shall see later how the marginal utility analysis has been criticised on the ground that the assumptions on which it is hashed arc unrealistic or invalid. TIle following arc the main assumptions. (i) Cardinal Measurement […]