The law of Diminishing marginal Utility

The Law of diminishing marginal Utility is one of the most important Laws of Economics. It is derived from the Satiable Character of human Want, i.e., a single human want can be completely satisfied.  Gossen, a German Economist was the first to explain the Law of diminishing Utility. Prof. Alfred Marshall popularised it.

Statement of the law:  According to Prof. Alfred Marshall, “The additional benefit which a person derives from a given increase of his stocks of anything diminishes with the growth of the stock that he has.”  In other words, this law states that, when a person goes on consuming a commodity one after another without any time gap, the additional utility derived by him from successive unit goes on diminishing. For example, when a person is hungry and eats bread, the first slice of bread gives him more utility, the second slice gives him less utility and the third slice gives him still less utility. This is because when he consumes the first slice of bread, his want is satisfied to some extent, when he consumes the second one, a further part of his want is satisfied  and so on till his hunger is completely is satisfied.

The law of diminishing marginal utility can be explained with the help of a table:

Slices of bread consumed	Total Utility	Marginal Utility
1	50	50
2	90	40
3	120	30
4	140	20
5	150	10
6	150	0
7	140	-10

From the above table it is clear that when the consumer consumes the first slice of bread, the Marginal utility is 50 units, the second slice yields 40 units and the 3^rd,4^th, 5^th slices of bread give him 30, 20 and 10 units of Utility.  The 6^th slice gives him zero utility and 7^th slice results in negative utility of -10.

Assumptions:

1.    The law holds good when the different units of a particular commodity consumed by a person are identical in size, colour, quality taste etc.

2.  The successive units of a particular commodity consumed should be reasonably large.

3.     The successive units should be consumed without any time gap.

4.     The consumer should be normal.

      In the above diagram, OX axis measures the units consumed and OY axis measures the utility.  ac is the marginal utility curve which is downward sloping curve.  This curve shows that when a person goes on consuming a commodity without any time gap the marginal utility goes on diminishing marginal utility.