Question

Explain one of your consumption experience that illustrates the concepts of total utility and marginal utility. In addition, discuss the mechanism of the law of diminishing marginal utility in this experoence and the impact of the related assumptions used in our course?

Answer 1

Total utility is the total satisfaction derived by consuming a given total quantity of a good whereas Marginal utility is the satisfaction derived by consuming an additional unit of that good.

As my Consumption experience, if I buys orange I will receives them in units,1,2,3,4 etc. To start with 2 orange gives more utility than 1, 3 orange gives more utility than 2, and 4 more than 3. The Increase in the number of consumption of every orange unit I consumes are in descending order of their consumption.

As the Law of Diminishing Marginal Utility refers to the consumption of every additional unit of a commodity gives lesser and lesser satisfaction and it's goes on declining.

As my Consumption experience my additional unit of orange gives lesser and lesser satisfaction and after it become no need of consumption at a point and if consumption continues it become Negative.

Some Assumptions of Law of Diminishing Marginal Utility:

1). Continuous Consumption: The commodity must be consumed one after the other at the same time without taken break in consumption.

2). Independent Utility: Every commodity has its utility satisfaction and it is a assumption that only one commodity is consumed at a given time.

This Law of Diminishing Marginal Utility is only applicable for same units only. If the goods are differ in size, shape etc, so such changes in factors affects the utility from it can be increased.