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Dr. Meghna Jain (pt) posted an Question
September 15, 2021 • 21:25 pm
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30 points
30 points
- UGC NET
- Management
What is meant by total utility at diminishing rate as marginal utility decreases with every additional consumption?
what is meant by total utility at diminishing rate as marginal utility decreases with every additional consumption
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The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility that they derive from the product wanes as they consume more and more of that product. A rational consumer is a utility maximizer. A consumer will seek to have as much benefit or satisfaction as possible. In economics, the term utility refers to the happiness, benefit or value a consumer gets from a good or service. In other words, consumers are not satisficers who will settle for "good enough". This happiness or satisfaction is measured in a unit called a util. Most goods provide diminishing marginal utility. According to the law of diminishing marginal utility, as the consumption of good increases the additional amount of happiness the good provides the consumer decreases. So while having three scoops of ice cream makes you happier than two scoops, the second scoop doesn't make you as happy as the first one did, and the third one doesn't make you as happy as the second one did.