Marginal Utility of Money
Does the law of diminishing marginal utility apply to money? It is said that there can be a limit to the purchase of a commodity, but there i no such limit to the acquiring of money. Money is a ene I purchasing power. It enable the purchase r anything he like . That never reach a stage here m )- In other words, m re ~ pc desires to obtain it. That i the m money goes on increasing opposed to the Law of Dimini bing 1 We may concede the ‘ strength of the argument. But it is also true that the law of dimini hing marginal utility certainly applies to money too. As the quantity certainly applies to money too. As the quantity of money, that a person pos esse. increases. its significance to him decreases. It can be easily seen that a rich man attaches much Importance to each unit of money than the poor. He spends it more freely and is much less worried in case he happens to lose a certain portion of it. Every increment in the amount of money that man has brings him less and less extra pleasure. Hence, the law of diminishing marginal utility does apply to money.