Law of Diminishing Marginal Utility
The law suggests that if consumers consume a unit of a specific commodity that they need, their use of that specific commodity diminishes. This occurs because consumers have many wants and needs that they need to consume constantly hence the consumption of a unit of a given product or service reduces after consumption. The law of diminishing marginal utility is based in several assumptions: that the wants and needs of consumers are unlimited but each want can be satisfied by a commodity and as the consumer gets more and more of that commodity, the need keeps on reducing; that no good can substitute another when it comes to specific wants and needs; and that the use of money for a specific consumer is constant regardless of their wealth (Dittmer, 2005).
This implies that as a consumer goes to the market, different commodities have different levels of importance depending on the needs and wants of the consumer. In other words, consumer behavior changes as he or he purchases a product as satisfying a want leads to a reduced need for the commodity that satisfied that want.
An example of diminishing marginal utility that I encountered recently is when I went to the restaurant to have a meal. Upon getting to the restaurant, bought drink worth $50 and later ordered a meal that cost $100. The marginal utility then dropped because I was already full and no longer wanted to eat. The dessert remains untouched. The consumer’s satisfaction of the meal explains the diminishing marginal utility as he cannot spend any more money on a meal if he is already full. This also happens for many other consumer commodities such as toiletries, food, beverage and entertainment.