Diminishing marginal utility is a vital aspect of economics that makes it possible for business leaders to explain client demands and supply. One recent example of this utility is consuming a soda. Initially, when a person desires to take a soda, the demand is high and the person is likely to buy more than one can of soda. Consuming the first can provides greater satisfaction and a client might even think that he can have even ten cans. However, on consuming the second can or bottle of soda, the client will realise that the level of satisfaction is not as great as when consuming the first can. The customer will realise that the more he or she takes the soda the less the satisfaction compared to when they took the first can.
The other example of diminishing utility is when a person is thirsty. It is possible for anybody to think that they can consume two litres of water when they are very thirsty. However, after consuming half a litre of water a person will feel less thirsty and will not be able to finish the second half a litre of water. In this case, the consumer will have no need for more water since the first bottle provided the satisfaction needed. Thus, diminishing utility states that a person reaches a point of saturation when the consumer does not require anymore of the same commodity (Omarzabal, 2006) . The client’s need to utilize the same commodity decreases with time even though the customer may have more of the product. For example, the client will not have any more need to consume more soda or water after they quench their thirst and achieve the level of the required satisfactions (Beatty & LaFrance, 2005) . Thus, according to diminishing utility, a client reaches a point when they do not need any more of the product they desired at first.
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References
Beatty, B. R., & LaFrance, J. T. (2005). The law of demand versus diminishing marginal utility. CUDARE working papers , 1-10.
Omarzabal, K. M. (2006). The Law of Diminishing Marginal Utility in Alfred Marshall's Principles of Economics. European Journal of the history of economic thought. Volume 2, Issue 1 , 91-126.
