The Law of Diminishing Marginal Utility states that as more and more units of a commodity are consumed (continuously), marginal utility derived from every additional unit must decline.
This law can be explained with the help of the following Schedule :
| Units Consumed |
Total Utility (TU) |
Marginal Utility(MU) |
1
2
3
4 |
10
18
24
28 |
10
8
6
4 |
The above schedule shows that with the consumption of successive unit of a commodity, the level of satisfaction fall and will become negative also, or in other words, MU tends to decline as consumption of the commodity increases.
