Question

What are the impacts of the law of diminishing marginal utility gained as it applies to a recent purchase of a good or service?

Specifically, consider how your willingness-to-pay price was less for purchasing a second unit of a good or service based on getting less benefit from the second item you consume relative to the first?

Would you respond to purchasing the second unit if it was sold at a discounted price?

Do you seek to gain the same utility from all units you consume? (at least 175 words all together)

Answer 1

What are the impacts of the law of diminishing marginal utility gained as it applies to a recent purchase of a good or service?

Specifically, consider how your willingness-to-pay price was less for purchasing a second unit of a good or service based on getting less benefit from the second item you consume relative to the first?

Would you respond to purchasing the second unit if it was sold at a discounted price?

Do you seek to gain the same utility from all units you consume?

The economists define the Law of diminishing Marginal Utility as that states that the marginal utility of the goods or services decreases as its availability increases with time. Hence the additional utility gained from an increase in consumption decreases with each subsequent increase in the level of consumption.

Hence when an individual interacts with an economic goods or services, that individual acts in a way to demonstrate that the order in which they value the use of that good. So, the first unit consumed is dedicated to the individual's most valued end than the second unit which can be said as second most valued end, and so on. The economists explain further that the law of diminishing marginal utility claims that when consumers go to market to purchase a commodity, they do not attach equal importance to all the commodities they buy. They will pay more for some commodities and less for others.

So willingness-to-pay price will be less for purchasing a second unit of a good or service basis getting less benefit from the second item one consume relative to the first, since the law of marginal utility demonstrates why a rise in the money stock considering other things being equal reduces the exchange value of a money unit since each successive unit of money is used to purchase a less valuable end. Hence a product consumed provides satisfaction, but too much of a product consumption means that the marginal utility reaches zero because as I consumed had enough of the product and are satisfied.

Considering the demand and supply of the product purchasing the second unit if it is sold at a discounted price can be explained in other words as the utility of successive units of a commodity to an individual diminishes with every increase in the stock of that commodity. Utility simply means the capacity of a commodity to satisfy a given desire. Hence the economists explain that a commodity has high utility means that it is intensely desired by somebody who is prepared to pay a high price in exchange for it. As explained by economist in other words as at any given time the marginal utility of any commodity to its owner decreases with every increase in the stock of that commodity.” Hence the second unit depends on the stock and satisfaction level as per the Law of diminishing Marginal Utility.