Saturday, September 1, 2018

Law of diminishing marginal utility

LAW OF DIMINISHING  MARGINAL UTILITY - 

It states that with more and more consumption of the units of the commodity , the utility derived from each successive unit decreases , provided the consumption of other commodities remain  constant .

As the number of units consumed increases , the satisfaction level decreases with the consumption of other commodities .

EXAMPLE -  After watching a movie for the first time , the satisfaction level is high but it keeps on decreasing after watching the same movie for the 4th or 5th level.

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