UP Board Solutions Class 10 Commerce Chapter 19 Law of Diminishing Marginal Utility

Law Of Diminishing Marginal Utility Objective Type Questions (1 Mark)

Question 1. The law of diminishing marginal utility regulates our daily:
(a) Income
(b) Production
(c) Expenditure
(d) Saving
Answer: (c) Expenditure
In simple words: The law of diminishing marginal utility primarily influences our daily expenditure decisions as we tend to consume less of a good once its marginal utility starts to decline.

🎯 Exam Tip: Remember that this law directly impacts consumer behavior and how we allocate our spending, making it a key concept in microeconomics.

Question 2. When the total utility is maximum marginal utility is:
(a) Zero
(b) Less than one
(c) More than one
(d) None of these
Answer:
(a) Zero
In simple words: Total utility is at its peak when consuming one more unit provides no additional satisfaction, meaning the marginal utility of that last unit is zero.

🎯 Exam Tip: Understanding the relationship between total utility and marginal utility, especially the point of zero marginal utility, is crucial for answering questions on consumer equilibrium.

Question 3. The more we have of a thing, the - we want to have of it.
(a) Less
(b) More
(c) Either(a) or
(b)
(d) None of these
Answer: (a) Less
In simple words: According to the law of diminishing marginal utility, the more units of a good we possess, the less additional satisfaction we derive from each subsequent unit, leading to a reduced desire for more.

🎯 Exam Tip: This question tests your fundamental understanding of the core premise of the law of diminishing marginal utility – that satisfaction from additional units declines.

Question 4. The law of diminishing marginal utility - in the case of rare collections.
(a) Apply
(b) Does not apply
(c) either
(a) or
(b)
(d) None of these
Answer: (b) Does not apply
In simple words: The law typically does not apply to rare collections because the utility often increases with each additional unique item acquired, rather than diminishing.

🎯 Exam Tip: Be aware of the exceptions to the law of diminishing marginal utility, such as hobbies involving rare collections or highly valued unique items, as these are common test points.

Question 5. If the period of consumptions is not the - law of diminishing marginal utility does not operate.
(a) Stop
(b) Never end
(c) Continuous
(d) None of these
Answer: (c) Continuous
In simple words: For the law of diminishing marginal utility to hold, consumption must occur continuously or within a reasonably short period; large gaps between consumption units can reset the utility derived.

🎯 Exam Tip: The assumption of continuous consumption is a critical condition for the law's applicability, highlighting the importance of understanding its underlying conditions.

Law Of Diminishing Marginal Utility Definite Answer Type Questions (1 Mark)

Question 1. What are human wants?
Answer: Unlimited.
In simple words: Human wants are endless and ever-growing, forming the basic premise of economics as resources are scarce relative to these unlimited desires.

🎯 Exam Tip: This is a foundational concept in economics, emphasizing the problem of scarcity that all societies face.

Question 2. Write the direction of Marginal Utility Curve.
Answer: The curve slopes downwards to the right.
In simple words: The marginal utility curve slopes downward because, as more units of a good are consumed, the additional satisfaction (marginal utility) derived from each subsequent unit decreases.

🎯 Exam Tip: Visualizing the downward-sloping marginal utility curve helps in understanding the core principle of diminishing returns in utility theory.

Law Of Diminishing Marginal Utility Very Short Answer Type Questions (2 Marks)

Question 1. State any two assumptions of law of diminishing marginal utility.
Answer: Two assumptions of law of diminishing marginal utility are as follows:
(a) Change in other person's stock: The law of diminishing marginal utility does not hold if there occurs a change in other people's stock. According to the law, marginal utility diminishes when there is an increase in our stock. But it is pointed out that in some cases the utility changes not because of a change in our stock, but because of a change in other people's stock.
(b) Suitable Time: In order to make the law applicable, the commodity should be consumed within a certain time otherwise, the law will not operate.
In simple words: Two key assumptions are that the utility we derive isn't affected by others' possessions, and the consumption of the good must occur continuously within a reasonable timeframe.

🎯 Exam Tip: Clearly listing and briefly explaining the assumptions of economic laws like this is a common scoring point in examinations.

Question 2. Write a brief note on the importance of the law of diminishing marginal utility.
Answer: The importance of the law can be explained as under:
(a) Indicates relation between the standard of living and efficiency: The law of diminishing marginal utility helps us to understand the reason for a fall in the efficiency owing to a rise in the standard of living of the people.
(b) Theory of Taxation and Public Expenditure: Prof. Marshall utilised the law of diminishing marginal utility to build up his theory of taxation and public expenditure.
(c) Importance in the Field of Exchange: The law of diminishing marginal utility has its own importance in the field of exchange also. When the supply of any commodity increases its marginal utility decreases and the prices also come down. The commodities which are supplied largely have no value-in-exchange. Thus, the law has considerable importance in the field of exchange.
(d) Basis of Consumer's Surplus: The utility derived by a consumer from each successive unit of a commodity goes on diminishing, though the price of the article remains unchanged. He stops his purchase and that point where the utility derived equals utility lost. Thus, the law of diminishing margined utility is the basis of the concept of consumer's surplus.
In simple words: The law is crucial for understanding how our standard of living affects efficiency, forming the basis of taxation and public spending theories, influencing exchange values, and explaining consumer surplus.

🎯 Exam Tip: Focus on linking the law to practical applications like taxation, exchange, and consumer surplus to demonstrate a comprehensive understanding of its significance.

UP Board Solutions For Class 10 Commerce