Question

Explain the law if diminishing marginal utility.
Why would you eventually reach the point of negative marginal utility at an all you can eat restaurant?

Answer 1

Solution : The law of diminishing marginal utility states that as we go on consuming more and more units of the commodity the utility from that commodity goes on diminishing.

For example : If You are hungry then you are most likely to consume the first unit of the burger suppose ,this first burger will give lot of satisfaction to you. Now suppose you are consuming next burger than the utility that you get from the 2nd unit will somewhat be lesser than the utlity from the first unit.This is because the first unit have gave you some level of satisfation .And again if you consume the third burger the satisfaction that this burger will give will be lesser than the both units consumed previously .This is because your stomach is probably going to fill.So now what will happen if you comsume more units after this you will be fed up and may not be willing to consume more unit of an additional burger.And this burger will decrease your satisfaction level if you consume it. And if you consume more and more than definetely you are going to vomit which results in negative utility.

So you will end up consuming upto a level where your marginal utility from the additional good is zero.