The Law of Diminishing Marginal Utility and Its Critics

Concept of Total and Marginal Utility

Total utility refers to the level of satisfaction a consumer derives from consuming a product. For instance, when a person consumes $1$ apple, the level of satisfaction is $7$. Upon consuming a $2$nd apple, the level of satisfaction changes, reflecting marginal utility, which the instructor identifies as being related to the $QC$. The law of diminishing marginal utility explains how this satisfaction changes with additional units.

Critics of the Law of Diminishing Marginal Utility

Critics point out several flaws in the law. First, the law assumes homogeneity, meaning the products consumed must be identical; this contrasts with heterogeneity, which involves products made of different materials. Second, the law assumes that utility is measurable, yet in practice, it is impossible to measure the exact satisfaction gained from eating an item like inshima. Finally, the law does not apply to OPIS or hobbies, such as the collecting of odd coins and stamps. In these cases, the desire or zeal to collect more actually increases rather than diminishes with more participation.

Questions & Discussion

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