Assumptions of Diminishing Marginal Utility

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Notes

Assumptions of Diminishing Marginal Utility : 

1) Rationality : 

Consumer is assumed to be rational. It means that his behaviour is normal and he tries to maximize his satisfaction.


2) Cardinal measurement : 

The law assumes that utility can be cardinally or numerically measured. Hence, mathematical operations are easily possible to know and compare the utility derived from each unit of a commodity.

 
3) Homogeneity :

All units of a commodity consumed are exactly homogeneous or identical in size, shape, colour, taste etc. 

4) Continuity :

All units of commodity are consumed in quick succession without any lapse of time.


5) Reasonability :

All the units of a commodity consumed are of reasonable size. They are neither too big nor too small.


6) Constancy :

All the related factors like income, tastes, habits, choices, likes, dislikes of a consumer should remain constant. Marginal utility of money is also assumed to be constant.


7) Divisibility :

The law assumes that the commodity consumed by the consumer is divisible so that it can be acquired in small quantities.

8) Single want :

A given commodity can satisfy a single want of a person. The law assumes an experience of a single want which is completely satiable at a given point of time.

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