Question

Explain the importance of the law of Diminishing Marginal Utility.

Answer 1

The following are some of the points that highlight the importance of the law. 

1. This law helps the consumers in budget planning.
2. It helps the producers in determining various policies such as the price and sales policies.
3. Keeping in consideration this law, a monopolist can easily follow the price discrimination policy.
4. Formulate and implement appropriate policy decisions.