THE LAW OF DIMINISHING MARGINAL UTILITY PREPARED STUDENT ARIKOVA MARIA, GROUP У 1-4 IUJAKOVA N.E The Federal State-Funded Educational Institution of Higher Professional Education "Financial University under the Government of the Russian Federation"

The law of diminishing marginal utility The more you consume a good or use a service, the less satisfied you will be with each successive use or consumption.

FOR EXAMPLE:

LAW IS BASED UPON THREE FACTS: First, total wants of a man are unlimited but each single want can be satisfied Secondly, different goods are not perfect substitutes for each other in the satisfaction of various particular wants. Thirdly, the marginal utility of money is constant given the consumers wealth.

ASSUMPTIONS OF LAW OF DIMINISHING MARGINAL UTILITY: Rationality Constant marginal utility of money Diminishing marginal utility Utility is additive Consumption to be continuous Suitable quantity Character of the consumer does not change No change to fashion No change in the price of the commodity

SCHEDULE OF LAW OF DIMINISHING MARGINAL UTILITY: UnitsTotal utilityMarginal utility 1 st glass20 2 nd glass rd glass408 4 th glass422 5 th glass420 6 th glass39-3

CONCLUSION The Law of Diminishing Utility is simply a statement of tendency. It hold goods, provided other factors remain constant.

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