# The Laws of D.M.U.

#### Law of Diminishing Marginal Utility :

Introduction : This law was first proposed by Prof. Gossen but was discussed in detail by Prof. Alfred Marshall in his book ‘Principles of Economics’ published in 1890.

The law of  diminishing  marginal  utility is universal in character. It is based on the common consumer behaviour that utility derived diminishes with the reduction in the intensity of a want.

Statement of the Law : According to Prof. Alfred Marshall, “Other things remaining constant, the additional benefit which a person derives from  a  given increase in his stock of a thing, diminishes with every increase in the stock that he already has.”

In other words, marginal utility that any consumer derives from successive units of a particular commodity goes on diminishing as his or her total consumption of that commodity increases. In short, the more of a thing you have, the less you want to have more of it.

Assumptions :

Following are the assumptions of the law of diminishing marginal utility :

• Rationality : Consumer  is  assumed  to be It  means  that  his  behaviour is normal and he tries to maximize his satisfaction.

• Cardinal measurement : The law assumes that utility can be cardinally or numerically measured. Hence, mathematical operations are easily possible to know and compare the utility derived from each unit of a commodity.

• Homogeneity : All units of a commodity consumed are exactly homogeneous or identical in size, shape, colour, taste

• Continuity : All units of commodity are consumed in quick succession without any lapse of

• Reasonability : All the units of a commodity consumed are of reasonable They are neither too big nor too small.

• Constancy : All the related factors like income, tastes, habits, choices, likes, dislikes of a consumer should remain constant. Marginal utility of money is also assumed to be

• Divisibility : The law assumes that the commodity consumed by the consumer is divisible so that it can be acquired in small

• Single want : A given commodity can satisfy a single want of a person. The law assumes an experience of a single want which is completely satiable at a given point of time.

Below table explains the Law of Diminishing Marginal Utility.

 Units of x Marginal Utility (MU) 1 10 2 8 3 6 4 4 5 2 6 0 7 –2

The table shows that marginal utility keeps on diminishing with increase in consumption, further it becomes zero and then negative.