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Criticism of the Law of Diminishing Marginal Utility

Written By Fathimath Sama on Thursday, 20 June 2013 | 14:12


Though the law expresses a universal tendency of consumer’s introspective behaviour, its traditional exposition has been criticized on various counts. 
  • The traditional or Marshallian explanation of the law presumes the cardinal measurement of utility. The law assumes that utility can be numerically measured added or subtracted. This is rather not convincing because utility being a subjective or introspective phenomena cannot be measured numerically. It is a feeling experienced by the consumer. We cannot therefore have a objective measure of a subjective feeling. 
  • The law is based on unrealistic assumptions or conditions. The condition assumed like homogeneity, continuity, constancy and rationality all together present at a time is very difficult to find in practice. 
  •  The application of the law to the indivisible bulky commodity seems to be absurd. Because no one would normally buy at a time more than one unit of good like television set, refrigerator, scooter, motor car etc. It would be absurd to talk of increase in the stock of such goods and marginal utility thus derived. 
  • The law unrealistically assumes constant marginal utility of money, which is highly unsatisfactory, with the increase in purchase of goods, for consumption, the marginal utility of money will increase due to the diminishing stock of purchasing power.

Notes provided by Prof. Sujatha Devi B (St. Philomina's College)
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