Diminishing Marginal Utility and Diminishing Marginal Product
Utility is the satisfaction that a person derives from the consumption of a good or service.
Total utility is the total satisfaction received from consuming a given total quantity of a good or service.
Marginal utility is the satisfaction gained from consuming another quantity of a good or service.
Diminishing marginal utility is the satisfaction gained from consuming another quantity of a good or services are declining and probably can be zero.
For example: If you like ice cream, and you eat one scoop, the first scoop will provide the greatest satisfaction. If you eat another scoop, you'll probably enjoy that also, but the satisfaction will be less than for the first. At some point, you will not want any more ice cream. The marginal utility will drop to zero and will even become negative.
Diminishing marginal utility also can be defined as a economic concept that as a consumer obtain more of something, each additional unit of that thing brings progressively less utility.
Diminishing marginal product states that as equal quantities of one variable factor are increased, while other factor inputs remain constant, a point is reached beyond which the addition of one more unit of the variable factor will result in a diminishing rate of return and the marginal physical product will fall.
For example: If at one shop 1 person is working and if we employ 1 more person , then, total income will increase at an increasing rate as they can have better division of labor now. Income will increase at an increasing rate till there are 5 workers and they are fully utilized. And if we will employ 1 more person then total income might increase, but the average income will fall, ie income per person will fall due to 1 extra unit of labour. or we can say addition made by the 6th worker is less than the earlier unit (ie Marginal product of 6th unit of labour will fall.)
