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# Law of diminishing marginal utility

###### What is the cardinal utility study? Examine critical the law of diminishing Marginal Utility.

Meaning of cardinal utility :- Cardinal utility refers to cardinal numbers like 1, 2, 3, 4 etc. Cardinal utility are those numbers which can be added or subtracted.

In other words:- When we consume anything its utility measures in numbers like counting as 1,2,3,4,5, etc. Which can be increased and decreased in total utility.

Definition of utility:- Want Satisfying power of a good is called utility. It denotes a quality in a commodity or service by virtue of which our wants are satisfied.

According to Hibbdon, “Utility is the quality of a good to satisfy a want”.

Marginal Utility

Meaning of Marginal Utility:- The change that takes place in the total utility by the consumption of an additional unit of a commodity is called marginal utility.

For Example:- By consumption of the first cup of tea you get 15 units of utility and by the consumption of the second cup of tea your total utility goes up to 25 units. It means, the consumption of a second cup of tea has added 10 units = 25-15 of utility to the total utility.

Defining of Marginal Utility:- “Marginal utility is the increase in the total utility by consuming one more unit of commodity.” is said marginal utility.

Marginal utility can be measured with the help of the below equation.

MUnth= TUn – TUn–1

Law of diminishing marginal Utility

Meaning of law of diminishing marginal Utility:- When you Consume the same thing again and again at any given time, then the number of such goods with you goes on increasing. The marginal utility from each successive thing will go on decreasing. It is the reality of our life. Which is referred to in economics as the law of Diminishing Marginal Utility.

Definition of law of Diminishing marginal utility :- “As the amount of any thing that a person has increases, the satisfaction of that object decreases as it increases”.

In other words:- When a consumer consumes more and more units of a commodity, in a given time, the Utility derived from each successive unit goes on declining.

So consumers will buy a product at that point where the marginal utility of the commodity is equal to price paid for it.

Price = Marginal Utility

Law of diminishing marginal utility can be understood by considering the following table.

###### Let’s study Law of Diminishing Marginal Utility

Table Shows that

• The First cup of tea yields 4 units of marginal utility. This will satisfy your want to some extent.
• The second cup of Tea yields still less marginal utility than the first one as is 3 units.
• Third cup of tea yields still less marginal utility as 2 units, and
• Fourth cup of tea is just 1 unit of marginal utility. At this point, want may be fully satisfied.
• Thus, the Fifth cup of tea yields zero marginal utility.
• If you take the sixth cup of tea it may upset your system. In other words you may get negative utility say,  –1 unit.

It is evident from the Above Table that as more and more units of cup of tea are consumed, Thus Marginal utility from each Successive unit goes on diminishing.

From the Figure we can considered units of Quantity are shown on the ox-axis and Marginal Utility on the oy-axis. This slopes downward from left to Right.

• As we see, the first cup of Tea yields Four utilities.
• Second cup of tea yields three units.
• Third cup yields two utilities.
• Fourth cup of tea yields one of marginal Utility.
• Fifth cup of tea yields zero marginal Utility. At this point, AB Curve touches the x-axis at point ‘C’ that shows the fifth cup of tea.
• Sixth cup of tea yields negative marginal utility. So, the AB curve goes below the x-axis

Conclusion – From the above discussion we understand that cardinal utility is measured in numbers as like 1,2,3,4.. So on. We are also able to understand the concept of marginal utility. Marginal utility rule is implemented in the normal life of human beings.

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###### law of diminishing marginal utility study
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