Law of Diminishing Marginal Utility

What is Diminishing Marginal Utility :

Diminishing Marginal Utility¬†: A German economist Gossen was the first to explain the law. Alfred Marshal gave a precise explanation to the law. Marshall Says: ”¬†The additional benefit which a person derives from a given increase of stock of anything diminishes with every increase in the stock that he already has”.

The Law is based on the common experience of every man. It points out that there is a limit to each want. When we are hungry we eat food and he satisfied. We cannot take another dish of food immediately. When we are thirsty one or two glasses of water quenches our thirst. Wants are thus satiable. If we consume more and more units of a good, the additional units yield diminishing satisfaction. If we are given a large quantity of any one good our want for it will be completely satisfied Further, after the first unit, each additional unit gives lesser satisfaction. When we do not have a commodity we like, our intensity of desire will be great. When we take one unit after another our intensity of desire diminishes. At one stage we will be completely satisfied. The more we have of a thing the less we want to have more of it. This is human tendency and the law is based on it.

Let us suppose that one is found of apples. The first one would taste delicious. The second gives less satisfaction. The third still less and so on. He will reach a point where eating one more apple will not give him any satisfaction. He reached the point of satiety.

After that stage, additional applies, instead of giving satisfactior cause dissatisfaction. We say that the utility or satisfaction of the successive apples is diminishing. If the satisfaction does not diminish the person will go on consuming apples and nothing else. Since no one utilizes his time and money on only one commodity, it means ts satisfaction diminishes. Let us take an example:

Law of Diminishing Marginal Utility
It is clear from the above table that as the good is consumed, each succeeding unit gives less satisfaction than the preceding one. When the person takes five apples he is completely satisfied. The sixth one gives him dissatisfaction or dis-utility.