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

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

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

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

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

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

Question 1.
What are human wants?
Answer:
Unlimited.

Question 2.
Write the direction of Marginal Utility Curve.
Answer:
The curve slopes downwards to the right.

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 iri 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.

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.

UP Board Solutions for Class 10 Commerce