Which of the following statements about the law of diminishing marginal utility is NOT correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → It states that total utility falls with each additional unit consumed.
The law is about marginal utility, the satisfaction from each extra unit.
Option (1) It holds while the consumption of other commodities is kept constant. — True. The law holds while keeping consumption of other commodities constant.
Option (2) It happens because the desire to have still more of the commodity becomes weaker. — True. Once she has some of the good, her desire for still more becomes weaker.
Option (3) It helps to explain why the demand curve slopes downward. — True. Each extra unit is worth less, so she buys more only at a lower price.
Option (4) It states that total utility falls with each additional unit consumed. — False. The law says marginal utility declines with each extra unit; TU rises at a diminishing rate while MU is positive.
NCERT (2026-27): “Measures of Utility … Usually, it is seen that the marginal utility diminishes with increase in consumption of the commodity. This happens because having obtained some amount of the commodity, the desire of the consumer to have still more of it becomes weaker. … You may also notice that total utility increases but at a diminishing rate: The rate of change in total utility due to change in quantity of commodity consumed is a measure of marginal utility. … Law of Diminishing Marginal Utility states that marginal utility from consuming each additional unit of a commodity declines as its consumption increases, while keeping consumption of other commodities constant.” “Derivation of Demand Curve in the Case of a Single Commodity (Law of Diminishing Marginal Utility) … Hence, the law of diminishing marginal utility explains why demand curves have a negative slope.” |