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The law of diminishing marginal utility is one of the most important concepts in Economics. Any student studying the subject will definitely come across the topic at least once. While the concept is interesting, it still requires thorough understanding to work on law of diminishing marginal utility homework solutions. That is when myhomeworkhelp.com can be of use to you. You can seek the help of our tutors to understand the topic better.
What is law of diminishing marginal utility?
In economics, the law of diminishing marginal utility mentions that there’s a decline in marginal with increased intake of products. This law is applicable if intake of all other items remains constant. With increasing intake, the individual’s marginal utility from the additional unit of the product decreases. The term utility here refers to the general sense of fulfilment or joy of the individual. The increasing utility resulting from intake of extra units is known as marginal utility.
All this may sound confusing to you. If so, you definitely require some expert guidance for your law of diminishing marginal utility assignment solutions. Our tutors will explain the law in details, making sure you are well acquainted with the key terms as well. In the process, of course, you will have your assignment problem solved as well. What else could you ask for?
Importance of the law
The law shows a crucial relationship between a commodity’s consumption quantity and utility. It states that with growing consumption of a product, there is a decrease in utility rooting from each additional unit. This is why people have a tendency of choosing variety of products. Even if the product is excellent, consuming it more lowers the satisfaction one gets from consuming the exact excellent product.
In your law of diminishing marginal utility homework solutions, you may have to mention the importance of the law. Its importance cannot be better depicted than by showing its real-life applications. The relationship explained by the law between consumption and satisfaction holds true for most real-world situations.
Demonstrative examples
Suppose, an individual has an option of purchasing a slice of pizza. The individual might be hungry and end up buying five pizza slices at once. When the individual eats the first slice, the utility gained from consuming it is quite positive. This is because he/she is hungry and the food caters to that hunger. Then, the second slice satisfies the appetite of the individual. Still, the individual wasn’t as hungry as he/she was at first. Thus, the sense of joy is comparatively less.
There is even lesser utility with the third slice since the individual is no longer hungry. The individual experienced diminished marginal utility with fourth slice. This is because he/she is now full and additional intake of food causes discomfort. The individual might not even be able to eat the fifth slice. This causes a negative utility. If you need to explain the law in your law of diminishing marginal utility assignment solutions, you can use such examples.
These pizza slices demonstrate how anyone experiences a decreasing utility on consuming any good. From a business perspective, a company may require four accountants as a part of its staff. There might not be a need of any other accountant for the needs of the business. In that case, hiring an additional accountant causes a diminished utility. This is because new hiring has little benefits associated with it. You can even use this example in your law of diminishing marginal utility homework solutions.
Assumptions for the law
There are certain assumptions that have to be made for the law to stand true. Each of these assumptions have a logic behind them. You should know these assumptions before you get started with your law of diminishing marginal utility assignment solutions. The law doesn’t hold true if any of these assumptions aren’t true. Following the assumptions for the law of diminishing marginal utility:
- The consumer should be able to quantify the utility. He/she should be able to state the utility received in quantitative expressions.
- The rational consumer wants to maximize his/her utility
- The unit of measurement is required to be standard and continuous
- There should be a continuous consumption of goods. In case of a long enough break in consumption, the diminishing marginal utility’s concept is altered
- The successive units of the product should have the same quality. The law may not be true if there is a decrease or increase in quality.
- The consumer’s taste and mental outlook should remain the same throughout the continuous intake.
You must keep all these assumptions in mind while working on your law of diminishing marginal utility homework solutions
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