Q.State the Law of Diminishing Marginal Utility. What are its main assumptions, and name two situations commonly cited as exceptions to it?

This is a definition-and-explanation question testing understanding of the law's statement, assumptions, and limits.

Statement of the law: As a consumer consumes more and more successive units of a commodity, per unit of time, the Marginal Utility derived from each additional unit goes on diminishing — other things (the consumer's income, tastes, and the prices of goods) remaining unchanged.

Assumptions on which the law rests:

• The consumer behaves rationally and consistently.
• The units of the good consumed are identical/homogeneous in size and quality — comparing a small bite of food to a full plate would not be a fair test of the law.
• Consumption is continuous, with no significant time gap between successive units — the law describes what happens within one continuous sitting, not consumption spread thinly over days or weeks.
• The consumer's income, tastes, and the prices of related goods remain constant throughout — any change in these would itself alter utility, independent of the quantity consumed.

Exceptions commonly cited (most are really cases where one of the assumptions above quietly fails, rather than a true violation of the law):

• A hobbyist's utility from collecting stamps, coins, or paintings may actually RISE with each additional piece added, since rarity and completeness of the collection matter more than sheer quantity.
• A miser's utility from each additional rupee saved may not diminish at all, since money is being hoarded rather than genuinely consumed.
• Cases of addiction (alcohol, tobacco) sometimes show MU rising over the first several units before the law eventually reasserts itself. …

Stating the law without its ceteris paribus ("other things remaining constant") qualification is an incomplete answer — without this qualification, the law would wrongly seem to be con …