Essay Help Services

Law of Diminishing Marginal Utility In Easy to Get Language

Home Articles Law of Diminishing Marginal Utility In Easy to Get Language

The law of diminishing marginal utility states that if a person goes on consuming something the utility will go on decreasing. For instance, if we are very thirsty then we will drink the first glass of water which will provide us maximum satisfaction but due to thirst we will go on increasing the consumption, and we will drink the second glass but the satisfaction level after the consumption of second glass would be less and so on. At last, the last glass of water would provide no satisfaction, and there will be zero marginal utility level at that level.

In this article we will discuss the importance and limitations of diminishing marginal utility:


  • The base of economics law

This is the basic law which is related to consuming the things. There are certain laws based on the law of diminishing marginal utility such as the law of demand and supply, the law of equi-marginal utility etc. For the more clarification, you must read the article 5 major determinants of demand.

  • The difference in production and consumption

The law brings about the changes in the production of different things. If we keep on consuming the same variety of products, we will get bored. Thus, we need different tastes, colours or shapes to attract our minds so that we can consume that product. We also go for something new and the latest trends.

  • Theory related to the value

This is the theory related to the demand and supply of the products. This theory states that there is fall in the prices when the supply is increased. The reason behind this is when we have something in surplus; its marginal utility diminishes making its value to fall.

  • Rare products

This is the situation when we consume the rare products. If we take the example of diamonds, it is a rare product, and its utility will not diminish. But if we talk about water, its utility diminishes as it is in abundant. Thus, the law of diminishing marginal utility is not applicable to the rare products.

  • Evolution in taxes

The increase in the taxes is also based on the law of diminishing marginal utility. When the income of the people increases, they have to pay more taxes and the utility for his money falls for him with every rise in the income.

  • Based on the society

In our society, money is not equally divided. Rich is becoming richer and poor is becoming poorer. But the marginal utility of money for the rich would be less. On the other hand, the poor will have the high marginal utility.

  • Manufacturer of the products

For the manufacturer, the law is helpful in increasing the sale of his product. To increase the sale, the price of the product is reduced by the producer so that they can have more profits. But this price will always have a margin in the product. With the fewer prices, consumption of the products will be more, but the maximum satisfaction will be from the first few products only.


Besides the importance of the law of diminishing marginal utility, there are certain limitations of this law.

  • Standardized products

The law is only applicable to the same kind of products. We have to assume that the person is consuming the same kind of product. It is also considered the same quality and weight of the product. For instance, if we consume a mango which is not sweet, and then we consume the other one which is sweeter, then the law of diminishing marginal utility does not apply here as the other one will give more satisfaction than the first one.

  • Taste remains the same

It also assumes that the taste will remain same. Further, there will be no change in the trends, customs, income and fashion of the customer or consumer. If there is any change in the mentioned factors, the law of diminishing marginal utility will not be applicable.

  • Continuous process

The continuity has to be there for the consumption of the products. The law demands the consumption of the products in succession at some specified time. If we consume the things at regular intervals, it will not diminish the utility.

  • A standard size of the products

The law of diminishing marginal utility says that the product should have a standard size. For instance, if you are offering spoons of water to a thirsty person, it will not diminish the utility but rather increase the marginal utility of water.

  • No change in the prices

The law of diminishing marginal utility works on the assumption of the prices remains unchanged. There is no rise or fall in prices, and the consumer has to buy the products at same rates.

  • Durable goods

If the goods are durable, their utility will diminish over a period. For instance, if we have bought a washing machine, it will be used for years and even a car, bike or television. The person would buy the only single product and will use it till it lasts.

  • Consumer is sensible

There is the requirement of a man being rational. We do not consider the case of someone who is addicted to some intoxicants. In that case, the marginal utility will never diminish. But it also has some exception when a person starts drinking and will automatically diminish if he starts puking.

  • Products are common

It applies to the products that are ordinary and are easily available in the market. If the person buys some precious jewels like a diamond that is rare, its marginal utility will never diminish. Thus, we have to consider the products that are not special and are available to all. But we also have contradictory statements for this point of view as no one will be interested in buying too many diamonds or abundant jewels.

  • The variable utility of money

We never have enough of money. If we have, we will increase our expenses. Undoubtedly, the person would not value money if he or she has most of it but it will never zero. In the case of the rich man, the marginal utility is less, but for the poor, it will be high. We can take the example of rich buying expensive and luxurious cars.

Therefore, the law of diminishing marginal utility can be studied with the live examples from our daily life by analysing the situations where they can fit better.

Similar Articles

Search Here

Order Now

Latest Reviews


Payments And Security