In order to clearly understand the law of diminishing utility, it isessential to understand first what utility means. Research hasindicated that utility is the psychological and physical satisfactionthat one gets when he or she utilizes a unit of a commodity of aservice. Any additional form of satisfaction from additional use of acommodity or a service is referred to as the marginal utility(Hirschey, 2014). Therefore, in economics, the diminishing law ofmarginal utility is the assumption that a consumer’s demand for acommodity or a service will reduce as he or she gets more of thecommodity. It is essential to note that this law explains the demandcurve where the demand seems to reduce with increase in supply. Thereare some aspects of this law that must be put into consideration inorder for it to be effective. For instance, the law assumes that thetaste of the consumer will not change over the demand period and thatthere must be continuous consumption.
In order for this law to take effect, economists have stated thatthe prices of other substitute goods must remain constant.Additionally, the units of the commodity or the service beingacquired must be standard. It is essential to note that there aresome exceptions to this law. For instance, this law does not apply tomoney as a commodity (Hirschey, 2014). The demand for acquiring moneydoes not reduce with the amount that one has got. This is the samecase with alcohol and other drugs who desire and demand increase withthe more one takes.
An example of this law that I have encountered is the demand anddesire I had for Chinese food. The first time I ate the food at aChinese restaurant, I felt immense satisfaction and could not waitfor the next meal. However, as I got used to the food, the desirediminished and my demand for the food went down drastically.
Hirschey, M. (2014). Fundamentals of managerial economics.Mason, OH: South- Western/Cengage Learning.