Law of Diminishing Marginal Utility

The Law of Diminishing Marginal Utility is one of the most well-known economic laws. As it is intuitively logical and plausible that there have been very few empirical tests on it. Investopedia states it as the following: “all else equal as consumption increases the marginal utility derived from each additional unit declines.” It is often explained by using our experience of over-eating. For example, when you are very hungry, the first banana you eat would be lovely, but the second and the third ones may gain less satisfaction. The fourth and the fifth ones may even be considered negative, when the stomach is full or overloaded. …

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ecyY

ecyY is the Founder of Real Estate Development and Building Research & Information Centre REDBRIC

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