{"id":3336,"date":"2021-07-01T21:48:30","date_gmt":"2021-07-01T16:18:30","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=3336"},"modified":"2025-12-21T13:23:11","modified_gmt":"2025-12-21T07:53:11","slug":"importance-of-law-of-diminishing-marginal-utility","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/importance-of-law-of-diminishing-marginal-utility\/","title":{"rendered":"Importance of Law of Diminishing Marginal Utility (DMU)  | Free Economics Articles"},"content":{"rendered":"\n<h2 class=\"wp-block-heading has-text-align-center\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Importance of Law of Diminishing Marginal Utility<\/mark><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">What is the <a href=\"https:\/\/youtu.be\/klbY4eXAqfg\" data-type=\"URL\" data-id=\"https:\/\/youtu.be\/klbY4eXAqfg\" target=\"_blank\" rel=\"noreferrer noopener\">Importance<\/a> of Law of Diminishing Marginal Utility?<\/mark><\/h3>\n\n\n\n<p><strong>Statement of the Law of DMU:<\/strong><br>According to Prof. Alfred Marshall, \u201cOther things remaining constant, the additional benefit which a person derives from a given increase in his stock of a thing, diminishes with every increase in the stock that he already has.\u201d<\/p>\n\n\n\n<p>In other words, a marginal utility that any consumer derives from successive units of a particular commodity goes on diminishing as his or her total consumption of that commodity increases. In short, the more of a thing you have, the less you want to have more of it.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\" target=\"_blank\" rel=\"noreferrer noopener\">Microeconomic Definition | Historical Review of Microeconomics<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" target=\"_blank\" rel=\"noreferrer noopener\">Scope Or Nature of Microeconomics<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/exceptions-to-the-law-of-diminishing-marginal-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/exceptions-to-the-law-of-diminishing-marginal-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Exceptions of Law of Diminishing Marginal Utility<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/criticism-of-law-of-diminishing-marginal-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/criticism-of-law-of-diminishing-marginal-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Criticism of Law of Diminishing Marginal Utility<\/a><\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/Importance-of-Law-of-Diminishing-Marginal-Utility-1024x576.png\" alt=\"Importance of Law of Diminishing Marginal Utility\" class=\"wp-image-3342 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/Importance-of-Law-of-Diminishing-Marginal-Utility-1024x576.png 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/Importance-of-Law-of-Diminishing-Marginal-Utility-300x169.png 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/Importance-of-Law-of-Diminishing-Marginal-Utility-768x432.png 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/Importance-of-Law-of-Diminishing-Marginal-Utility.png 1280w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\">Importance of Law of Diminishing Marginal Utility<\/h4>\n\n\n\n<p><strong>Significance of the Law:<br><\/strong>Despite the criticisms, the law of diminishing marginal utility is very popular and important in Economics because of its universal application.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">1) Useful to the consumers:<\/span><\/strong><\/p>\n\n\n\n<p>This law creates awareness among consumers. To obtain maximum utility from the limited resources, it is necessary to \u2018diversify\u2019 the consumption.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">2) Useful to the government:<\/span><\/strong><\/p>\n\n\n\n<p>The law is useful to the government in framing various policies such as progressive tax policy, trade policy, pricing policy, etc.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Basis of the paradox of values:<\/span><\/strong><\/p>\n\n\n\n<p>The law of diminishing marginal utility helps us to understand the paradox of values. It includes goods that have more value-in-use and zero or less value-in-exchange such as air, water, sunshine, etc. as well as goods that have more value-in-exchange and less value-in-use such as gold, diamonds, etc.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">4) Basis of the law of demand:<\/span><\/strong><\/p>\n\n\n\n<p>The law of demand is based on the law of diminishing marginal utility. According to the law of demand, the quantity demanded of goods rises with a fall in price and falls with a price increase. When a consumer purchases more and more units of a good, its marginal utility steadily declines. Hence, he would buy additional units of a commodity only at a lower price.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" target=\"_blank\" rel=\"noreferrer noopener\">Utility in Economics (Concepts of Utility)<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Features of Utility<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Types of Utility<\/a><\/li>\n<\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":3342,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[1686],"class_list":["post-3336","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-misc","tag-importance-of-law-of-diminishing-marginal-utility"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=3336"}],"version-history":[{"count":18,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3336\/revisions"}],"predecessor-version":[{"id":40806,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3336\/revisions\/40806"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/3342"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=3336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=3336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=3336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}