Question

• Describe the behavior of the marginal utilities of such products.
• Does this explain why many people choose not to smoke, but those who do usually consume ten or more cigarettes per day?

Answer 1

I'm not sure which products you're referring to. Assuming that you choose cigarettes as the products.

Cigarettes are addictive substances due to the presence of nicotine in it. Nicotine naurally makes you crave more and more for it once you decide to smoke.

Now, in this context, addiction of cigarettes is a total violation to the law of diminishing margianal utility. The law claims that as you consume more and more of a good, the additional utiltiy that you gain from consuming an extra unit of the good (which is basically the definition of marginal utility) falls. Simply put, marginal utility falls with increased consumption of a good.

For example, say you are very very thirsty. Someone gives you a glass of water. You feel REALLY REALLY GOOD. Dont you? Haha

But suppose you are made to drink another glass of water, and then another, ...and so on. What will happen?

HAHA well, you'll feel lesser and lesser good as your stomatch gets filled with water. At some point, you'll be so filled up that you'll rather not want any water.

Why does that happen?

The additional utility you derive from an extra glass of water falls as you increase the consumption of water.

Hence, this is diminishing marginal utility.

Now constrast with a smoker who decides to smoke cigarettes. As it is an addictive stuff, she gets more and more utility as she smokes more. So, the marginal utility from cigarettes is not diminishing. Rather, it is an increasing marginal utility.

This explains why many people choose not to smoke, but those who do usually consume ten or more cigarettes per day.