What applies to sweets applies to most of the material wants. You want house but not unlimited houses; you want cars but not unlimited cars; you want airconditioners but not unlimited airconditioners. You want that combination of various goods which you can afford and whose combination gives you maximum satisfaction. The law that that the additional satisfaction one derives from a thing decreases with increase in the amount of thing he has is called the law of diminishing returns. To quote Marshall (1968, 140):
There is an endless variety of wants, but there is a limit to each separate want. This familiar and fundamental tendency of human nature may be stated in the law of satiable wants or of diminishing utility thus: The total utility of a thing to anyone (that is, the total pleasure or other benefit it yields him) increases with every increase in his stock of it, but not as fast as his stock increases. If his stock of it increases at a uniform rate the benefit derived from it increases at a diminishing rate. In other words, the additional benefit which a person derives from a given increase of his stock of a thing, diminishes with every increase in the stock that he already has. |
|
