Exceptions to the Law of Diminishing Marginal Utility




Exceptions to the Law of Diminishing Marginal Utility :

1) Hobbies :

In certain hobbies like collection of various stamps and coins, rare paintings, music, reading etc., the law does not hold true because every additional increase in the stock gives more pleasure. This increases marginal utility. However, this violates the assumption of homogeneity and continuity.

2) Miser :

In the case of a miser, every additional rupee gives him more and more
satisfaction to increase with an increase in his stock of money. However, this situation ignores the assumption of rationality.

3) Addictions :

It is observed in case of a drunkard that the level of intoxication increases with every additional unit of liquor consumed. So MU received by drunkard may increase. Actually it is only an illusion. This condition is similar to almost all addictions. However, this violates the assumption of rationality. 

4) Power :

This is an exception to the law because when a person acquires power, his
lust for power increases. He desires to have more and more of it. However, this again violates the rationality assumption. 

5) Money :

It is said that the MU of money never becomes zero. It increases when the
stock of money increases. This is because money is a medium of exchange which is used to satisfy various wants. However, according to some economists, this law is applicable to money too. For example, marginal utility of money is more to a poor person than to a rich person.

However, these, exceptions are only apparent. Since they violate some or the other assumptions of the law and hence, they are not real exceptions.

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