Introduction:

The concept of utility was introduced in economics by Prof. William Stanley Jevons, an English economist. In economics, utility refers to the satisfaction or pleasure that a consumer derives from consuming a good or service. It is a concept used to measure the subjective well-being or happiness that an individual experiences when consuming or possessing a particular item. Utility is a crucial concept in understanding consumer behavior and preferences. The explanation of the law of DMU is given by Gossen clearly.

 The concept of utility was introduced in economics by Prof. William Stanley Jevons, an English economist. According to Jevons, “Utility is the quantity possessed by an object of producing pleasure or preventing pain.”

A utility means the want satisfying power of a commodity or service. Anything that satisfies human wants is said to have utility. E.g. Food, cloth, house, books, jewels, furniture, vehicles, air, water etc.

TYPES OF UTILITY

1. Form Utility: It refers to the addition or creation of utility by changing the form or shape of a matter. Form utility is created by the process of converting raw materials into finished goods. It involves adding value to a product by changing its form, appearance, or composition to make it more useful to consumers. Example: A carpenter turning wood into a finely crafted piece of furniture adds form utility to the raw material.

2. Place Utility It refers to the creation or addition of utility to a thing moving it from a place where it is wanted or where it has great utility.  utility is the value added by making a product available at a particular location where consumers can conveniently access it. It involves the distribution and logistics aspects of getting a product to the right place. Example: A supermarket strategically located in a neighborhood adds place utility by providing easy access to groceries for local residents.

3. Time Utility: It refers to the creation of utility by storing a commodity when it is available in abundance and supplying it during the off season when it is needed .Time utility is created by making a product available at a particular time when consumers want or need it. It involves managing the timing of production, distribution, and sales to match consumer demand. Example: Seasonal clothing sales provide time utility by offering discounts when consumers are more likely to buy.

4. Possession Utility or ownership utility: It refers to the addition of utility to commodity by changing the possession or ownership of the same from one person to another. Possession utility is the value added by allowing consumers to own, use, and enjoy a product. It involves facilitating the transfer of ownership or possession of goods and services. Example Financing options for purchasing a car provide possession utility by enabling consumers to acquire and use the vehicle before paying the full price.

5. Information Utility: Information utility is created by providing consumers with relevant information about a product, helping them make informed choices. It involves    advertising, product descriptions, and other means of communication. Example: Online reviews, product descriptions, and advertisements contribute to information utility by guiding consumers in their purchasing decisions.

6. Service Utility. It refers to the creation of utility through the rendering of same services which satisfy human wants. Utility created by the services of doctors, lawyers, teachers, dancers, singers etc. These are all the examples of services utility.

Explanation of the law:

H.H. Gossen, a German economist, was the first economist to explain the law of diminishing marginal utility. Prof. Alfred Marshall popularizes the law of diminishing Marginal Utility.

Gossen explains this law as fallows. The amount of one and the same enjoyment diminishes continuously as we proceed with that enjoyment without interruption until satiety is reached.

The Law of Diminishing Marginal Utility is a fundamental principle in economics that explains the relationship between the quantity of a good or service consumed and the satisfaction (utility) derived from each additional unit. The law states that as a person consumes more of a good or service, the additional satisfaction or pleasure (marginal utility) derived from each successive unit decreases, assuming that other factors remain constant.

For example, when a person goes on eating mango one after the other continuously, the first mango gives him more utility, the second mango gives him a little less utility and so on. That means, the marginal or additional utility which he derives from every successive mango goes on diminishes. This is so because when he consumes the first mango his want is satisfied to some extent, when he consumes second one, a further part of his want satisfied, when he goes to third some more part of his want is satisfied and so on. He gets lesser and lesser utility from the consumption of every successive mango.

It may be noted that the law of diminishing utility, states that the marginal utility which a person gets from the consumption of every additional unit of a certain commodity goes on diminishing.

The law can be explained through a table and a graph.

From the above table, it is clear that when the consumer consumes the first mango he gets a marginal utility of 35 , when he consumes an additional unit he gets MU of only 17, 15, etc. and lastly he gets zero. When he consumes 8^th unit of MU, he gets negative I.e. -3. Thus the MU which the consumer gets from the consumption of every additional unit of mango goes on diminishing.

ASSUMPTION OF THE LAW

1. Suitable quantity:  The units of commodity should not be very small or very big
2. Uniformity:  The successive units of commodity should not differ in any manner or way either in quantity or size.
3. Time gap: consumption must be in one continuous sitting. There should not be so much of gap in time.
4. No change in income: It is also important that the income of the consumer remains the same.
5. No change in price: The price of commodity should remain same. It should not be changed with successive units.

EXCEPTIONS OR LIMITATIONS OF THE LAW

1. Books and poetry:  Good books, poetry, and music may give the pleasure to the people who are interested in this and gives them more utility.
2. Public goods: The law does not apply to public goods such as telephones because the greater the number of telephones in the town, the greater is the utility obtained from the use of telephone.
3. Intoxicants:  Drinking of alcohols change the mental condition of the drunkards as they are consumed more and more.
4. Rare and curious things: This law does not apply to rate and curious things like collection of coins, stamps, rare paintings etc.

also read: explain the law of equi-marginal utility.