Marginal utility is regarded as the change in the overall utility that results from the change in one unit of consumption of the commodity per time unit ( Hirschey, 2009). The law of diminishing marginal utility is considered to be the law in economics that indicates that as an individual increases the consumption of a product while at the same time keeping the consumption of others constant, then there is a decrease in the marginal utility which the individual gets from the consumption of every additional unit of the product. The marginal utility results as the change in utility with the additional unit that is consumed.
A good example of the law of diminishing marginal utility is seen in the case where a person who does not have shoes that can be used to go to work decides to buy them. At the moment of the first purchase, the person has a positive initial marginal utility. As the individual continues to wear the shoes, he will be buying more shoes. However, with every purchase, there will be a decrease in the degree of satisfaction because of the accumulation of more shoes. It means that the marginal utility will be constant with time and afterward it will start to decrease. Another example is in the case of children when buying toys for them. At first, they will be excited to own and play with the toys, but with time they will have more toys and will eventually stop playing with them as they will lose interest. In this situation, the marginal utility does not relate to the value of the materials or their economic quantification, but to the ability of the users to consume and also its assessment.
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Evidently, the law indicates that the marginal utility of the good for every consumer decreases as an extra unit of the good that is being consumed results in a smaller rise in its level of usefulness.
Reference
Hirschey, M. (2009). Fundamentals of managerial economics : Mason, OH: South-Western/Cengage Learning.
