Answer to Question #83725 in Microeconomics for Nandy

Question

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. Here my doubt is that "keeping consumption of other commodities constant" means what? Here other commodities means which one? Please clarify this with an example.

Answer 1

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. "Keeping consumption of other commodities constant" means, that if we consume only bread and milk, then with the increase in consumption of bread the marginal utility of consuming each additional unit of bread declines, while keeping consumption of milk constant and vice versa.