Assumptions of Law of Diminishing Marginal Utility

According to the concept of law of diminishing marginal utility as the consumer increases the consumption of a good or service, while keeping other things constant there is decline in the utility or satisfaction which one derives from the usage of that good or service. Example of law of diminishing marginal utility is when you are hungry and as you eat something you fell good but as keep eating more food you begin to get less satisfaction out of eating food. Let’s see some of the assumption of law of diminishing marginal utility –

1. The consumer who is consuming the good or service should be rational or in other words his or her behavior should be rational.

2. The consumption of good or service in question should be continuous.

3. Another assumption of law of diminishing marginal utility is that there should be no change in taste & preferences of consumer who is consuming the good or service.

4. The quantity of the good consumed should remain same every time, so it should not be reduced as consumer increases the consumption of good.

5. Consumer should consume good without any prejudice so in the above example of food if the consumer came to know that he or she will not get food for next few hours then he or she may consume more food than necessary.

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