1. Presentation on
Law of
Presented by
Rahul Majumder
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2. Law of Diminishing
Marginal Utility
Law Of Diminishing Marginal Utility
Law
Table With The Graph
Assumptions & Exceptions Of Law
Thank You
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3. Definition
* The law of diminishing marginal utility
describes a familiar and fundamental tendency
of human behavior.
* “The law of diminishing marginal utility states
that, “as a consumer consumes more and more
units of a specific commodity, utility from the
successive units goes on diminishing”.
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4. a law of diminishing marginal utility
MARGINAL
UTILITY
The consumption of various unit of commodity.
TOTAL UTILITY(TU)
The sum total of satisfaction which a consumer receives by
consuming the various unity of the commodity.
(The more unit of a commodity he consumes, the greater will be his
total utility)
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5. The concept of marginal utility grew out of attempts by
economists to explain the determination of price.
•Marginal utility can be defined as a measure of relative satisfaction
gained or lost from an increase or decrease in the consumption of
that good or service.
•Examples –A motor vehicle or A haircut
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6. The law of diminishing utility is based upon three facts.
* Firstly
The wants of a man are unlimited but single want can be satisfied.
* Secondly
Different goods are not perfect substitutes for each other in the
satisfaction of various particular wants.
* Thirdly
There is no change in the tastes of the consumers.
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7. *
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8. *
1 ICE CREAM = ECSTATIC
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9. *
2nd ICE CREAM = STILL ECSTATIC
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10. *
3rd ICE CREAM = VERY HAPPY
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11. *
4th ICE CREAM = HAPPY
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12. *
5th ICE CREAM = STILL HAPPY
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13. *
6th ICE CREAM = NOT SO HAPPY
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14. *
7th ICE CREAM = UNHAPPY
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15. *
8th ICE CREAM = SICK
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16. The following table will make the law of
diminishing marginal utility more clear
Units Total Utility Marginal Utility
1st ice cream 20 20
2nd ice cream 32 12
3rd ice cream 40 8
4th ice cream 44 4
*
5th ice cream
The 45 1
following table will make
6th ice cream law of diminishing marginal
the 45 0
7TH ice cream utility more clear.
42 -3
8th ice cream 40
16 -5

17. * It is clear that in a given span of time :-
* The first cone of ice cream taken
man gives 20 units of utility.
* When he takes second cone of ice cream,
the marginal utility goes down to 12 units.
* When he consumes fifth cone of water,
the marginal utility drops down to zero and if
the consumption of water is forced further
from this point, the utility changes into disutility (–3), and so
on, until he pukes…
* Here it may be noted that the utility of the successive
units consumed diminishes not because they are of
inferior in quality than that of others. We assume that
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all the units of a commodity consumed are exactly alike

18. The graph will make the law of diminishing
marginal utility more clear
50 Total utility
40
30
20
Total utility
10
0
1 2 3 4 5 6 7 8
Marginal utility
30
20
10
Marginal utility
0
1 2 3 4 5 6 7 8
-10 18

19. Assumptions of the Law:-
The assumptions are –
*
*
*
*
* .
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20. Exceptions of the Law
*Intoxicants.
* Money.
* Rare collections.
Example: collection of the rare stamps and coins
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21. (p.s. No smiley has been hurt during the making of this
presentation!!)
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