Does the law of diminishing marginal utility hold for all goods and services we buy and...

Does the law of diminishing marginal utility hold for all goods and services we buy and consume? What are the exceptions?

Expert Solution

The law of diminishing marginal utility states that the marginal utility of a good or service declines as its consumption increases.

Change in taste and fashion of the consumer The law of DMU will be applicable only if the consumer is not supposed to change the taste and fashion of the commodity whatever he/she was using previously.
Habitual goods The DMU law will not be applicable for habitual goods such as consumption of cigarettes, consumption of drugs, alcohol, etc.
Durable and valuable goods Not applicable on durable goods as well as valuable goods such as buildings, vehicles, gems, gold, etc.
Dissimilar units This law is applicable for homogenous units only that are consumed in length, breadth, shape, and size. If there is a change in such factors, the utility obtained from it can be increased. For example: If the 2nd orange is much larger than the 1st one, it will yield more satisfaction than the 1st.
Abnormal person The law of DMU is applicable to normal persons only. Abnormal persons such as drunkards and druggists not associated with the law.

Rahul Sunny answered 1 week ago

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