Law of Diminishing Marginal Utility

Law of Diminishing Marginal Utility:
The law of diminishing marginal utility states that :
            ‘’The additional benefit which a person drives from an increase of his stock of a thing diminishes with every  increase in the stock that has already had’’
The law based upon two basic facts:
1. Total wants of a man are unlimited but each single want can be satisfied. As a man gets more of the commodity the desire of his want for that good goes on failing. A point is reached when consumer is no longer want any more units of that good.
2. Different goods are not perfect substitute for each other in the satisfaction of various particle wants. As much marginal utility will decline as the consumer gets additional units of a specific good.

           
XI Economics Law of Diminishing Marginal Utility www.biek.pk
  
Schedule showing law of diminishing marginal utility :  

Units of mangoes 
Total utility
  Marginal                              utility
      1
    10
    10
      2
    18
    8
      3 
    24
    6
      4
    28
    4
      5
    30
    2
      6
    30
    0
      7
    28
    -2

Trading Economics Topics yeh mashoor topics hai economics kay

Income Elasticity Of Demand 


Assumption of the law:


Rational behaviour of consumer.
Constant marginal utility of money.
Diminishing marginal utility.
Utility is additive.
Consumption to be continuous
Suitable quantity of a commodity.
Characteristics of the consumer doesn’t change.
No change in fashion, customer & tastes.
No change in the price of commodity.

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