Question

A marginal utility schedule of a person is given below. Discuss the law underlying the given schedule.

Pens (units)	1	2	3	4	5
MU (utils)	25	20	15	10	5

Answer 1

The Law of Diminishing Marginal Utility is the legal principle that underpins the provided schedule. The law of diminishing marginal utility states that when more and more units of an item are consumed, the degree of satisfaction gained from each subsequent unit continues to decrease. The renowned economist created this law.

Alfred Marshall It is based on the following assumptions.

1. All the units of a commodity must be identical, i.e., same in all respects - in size, colour, design, quality, etc.
2. The unit of the good must be standard.
3. The consumer's taste and preferences remain unchanged.
4. No time break in consumption of every successive unit of the commodity. 
5. There should be no change in the prices of substitute goods.

The schedule shows that the marginal utility derived reaches its highest when the first unit of Pen is eaten. However, the marginal utility continues to drop with each additional pen unit used, going from 25 utils to 5 utils after the fifth unit.