14+ The Law Of Diminishing Marginal Utility Diagram Pics. The law of diminishing marginal utility is the basic law of consumption. This concludes the explanation for the law of diminishing marginal utility.

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Law of diminishing marginal returns explained. In economics, diminishing returns is the decrease in the marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased. The following table will make the law of diminishing marginal utility more clear.

The utility of additional units of goods increases as price falls, until price equals the marginal utility.

The law of diminishing utility has great practical importance in economics. Diminishing marginal returns occur when increasing production further results in lower levels of output. People thus value goods at the margin: The law of diminishing marginal utility is inapplicable in case of rare collectables such as paintings, antiques, old coins.