ASSUMPTION TO THE LAW OF DIMINISHING MARGINAL UTILITY.



1.      Cardinal Measurement: It is assumed that utility can be measured in cardinal numbers or numerical terms. Such assumption helps to construct (make) the utility schedule to explain the Law of Diminishing U.

2.      Continuity in Consumption: All units of the commodity are to be consumed in quick succession. There should not be a gab or interval between consumption of two different.

3.      Ceteris Paribus: The Law of DMU assumes that other things are constant. For instance, taste, income, preference, attitudes, habits of the consumer should remain the same. If there is a change in attitude then marginal utility of the commodity may not diminish.

4.      Homogeneity: All units of the commodity must be identical in all respects such as quality, shape, size, colour, taste, and so on. If there are differences in the units consumed, the marginal utility may not diminishes.

5.      Rationality:It is assumed that consumer behaviour is rational. (Not be mad) the consumer is a normal person who wants to obtain maximum satisfaction. The consumer should not be abnormal such as drug addict, drunkard, miser (kanjus), and so on.


6.      Reasonable Units: The units of a commodity consumed should be of reasonable size. The units should neither be too big nor too small. The units must be of standard size.

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