An important law in economics is the Law of Diminishing Marginal Util

Micro Week 4 DQR

Anthony Murphy

Hello everyone,

The "Law of Diminishing Marginal Utility" is when a person consumes more of a good or a service, the use of that good or service declines. This is an important consideration when we look more into the supply and demand concept as it can affect both the supply and demand of a product or service. The "Law of Diminishing Marginal Utility" can apply when a consumer wants to choose between products as well, this all depends on the utility of the product and the necessities of the consumer. In this case if you look at an example of someone who just got home from a long day of work. The person is tired, but also hungry and this individual hasn't eaten all day. The person in this case will eat something before they go to bed because the marginal utility of eating something is higher than going to sleep, the food ultimately gives them more satisfaction.

An example of "diminishing marginal utility" that I have encountered recently is with my new found hobby golf. At first I didn't have much for clubs, and rented them when I had the chance to play on the golf course. A few months ago I started to build my golf club set, and due to their high expense I built it piece by piece. I would go to the golf store and purchase a few of the cheaper ones at once, and then go a few weeks later and buy some of the single more expensive pieces. If I were to analyze the trend, you could see that the more I went to the store to purchase golf clubs, the less I would require the need for more clubs because my set was complete.

The marginal utility of golf clubs increased until I had a full set, any purchase of additional clubs hereafter now has diminished utility to me. This law varies based on the types of goods and services, but in the end consumers will make choices to maximize utility.

Thank you, have a great week everyone!

Response –

Charles Blackmon

The law of diminishing marginal utility states that as we consume more of a item, the amount of satisfaction produced by each additional unit of that good declines. This law directly relates to the consumption and production of goods.

An example of diminishing marginal utility that I recently experienced was eating cinnamon rolls I had purchased and cooked. I was very hungry when I cooked them. I ate the first one and it was warm and delicious. That didn't satisfy my hunger so I consumed another another one. I started feeling a fullness in my stomach and it was very satisfying. I knew I should have just stopped at one but they were warm and inviting. I just felt like I needed one more and as I bit into it I could barely finish eating it because I was full. Therefore I didn't want anymore and it was like my eagerness to have that cinnamon roll had diminished. This is how the law of diminishing utility works. The additional utility gained from me increasing my number of cinnamon rolls I consumed decreased my want for any more cinnamon rolls. Really two of the cinnamon rolls satisfied mu hunger but because they still looked delicious I wanted more but I was full and couldn't force much more. It reminds me of a old folk tale that says "your eyes are bigger than your stomach". This meaning just because you see it doesn't mean that your stomach can hold all of it.

Response –

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