Question

Explain with reason whether you 'agree' or 'disagree' with the following statement:

Law of diminishing marginal utility depends upon various assumptions.

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

The Law of Diminishing Marginal Utility is based on many assumptions.

पर्याय

• Agree

• Disagree

Answer 1

I Agree with the given statement.

Reason:

1. Homogeneity: The law assumes that units of commodity consumed by consumers are uniform. They are identical or same in size, colour, shape, taste, etc.
2. Single use: Here, it is assumed that a commodity is used to satisfy only a single want to experience the law.
3. Cardinal Measurement: Utility can be measured in numbers. So that it is possible to know and compare utility derived from each unit of a commodity.
4. Rationality: A consumer is assumed to be a rational person, and he tries to maximise his satisfaction from his given income.
5. Continuity: There should not be a time lag between the consumption of 2 successive units. MU will not diminish if there is a time interval.
6. Standard Units: The units of commodity consumed should be of a standard or normal size. They should neither be too big nor too small, e.g., a cup of tea, etc.
7. Condition of Divisibility: The law assumes that the commodity consumed by the consumer is divisible so that it can be acquired in small quantities for consumption.
8. Constancy: MU of money remains constant. The tastes, habits, likings, etc., of a consumer and the place of a commodity remain constant throughout the period of consumption.