Question

State with reason whether you agree or disagree with the following statement:

There are no real exceptions to the law of Diminishing Marginal Utility.

Answer 1

I agree with this statement.

Explanation:

The above statement is True. There are exceptions to the law of diminishing marginal utility. This law fails to apply to earning money, acquiring knowledge, consuming liquor and cigarettes, hobbies such as women’s jewellery collection, stamp collection, old coins, antiques, listening to good music, and reading good poems again and again, etc. These exceptions are only apparent. Since they violate some of the law’s other assumptions, they are not real exceptions.

Answer 2

I agree with this statement.

Reasons: In the following cases, it is considered that the Law of Diminishing Marginal Utility (DMU) is not valid:

1. Hobbies: Certain hobbies, like collecting rare coins or stamps, are believed to provide increasing utility with each new coin or stamp acquired. Additionally, people who enjoy music are said to benefit more with each successive listen. Additionally, those who enjoy reading books are thought to gain more benefit from each reading. However, if someone is asked to collect the same kind of stamp, listen to the same song, or read the same book over and over again, the marginal utility will decrease, and the law will apply, according to the homogeneity and continuity assumptions of the Law of DMU.
2. Misers: Every increase in the money stock is considered to raise the marginal utility of money for a miser. However, the miser’s actions are illogical. He thus violates the law’s assumption of rationality. As a result, misers are not a true legal exception.
3. Addictions: Every extra unit of liquor consumed is believed to provide an alcoholic with increasing marginal utility. However, the drunkard’s actions seem illogical. He thus violates the law’s assumption of rationality. As a result, drunk people are not truly excluded from the law.

Thus, there are no real exceptions to the Law of Diminishing Marginal Utility.