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Criticisms of the Diminishing Marginal Utility

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notes

Criticisms of the Law :

1) Unrealistic assumptions :

The law of diminishing marginal utility is based upon various assumptions like homogeneity, continuity, constancy, rationality etc. but in reality it is difficult to fulfil all these conditions at a point of time.


2) Cardinal measurement :

The law assumes that utility can be expressed cardinally so it can be added, compared and presented through a schedule. In reality cardinal measurement of utility is not possible because utility is a psychological concept.


3) Indivisible goods :

The law is not applicable to indivisible and bulky goods like refrigerator, car, TV sets etc. which are normally purchased in single unit at a time.

4) Constant marginal utility of money :

The law assumes that MU of each unit of money remains constant. However, critics argue that MU of money differs from person to person. It is influenced by changes in prices, stock of money etc.


5) A single want : 

The law is restricted to the satisfaction of a single want at a point of time. However, in reality, a man has to satisfy many wants at a point of time.

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