Limitation/Exception of Law of Diminishing Utility
There are some exceptions or limitations of the law of diminishing utility.
- Case of intoxicants: Consumption of liquor defies the law for a short period. The more a person drinks, the likes it. However, this is tire only initially. A stage comes when a drunkard too starts taking less and less liquor and eventually stops it.
- ii. Rare collection: If there only two diamonds in the world, the possession of second diamond will push up the marginal utility.
- Application to money: The law equally holds good for money. It is tire that more money the man has, the greedier he is to get additional units of it. However, the truth is that the marginal utility of money declines with richness but never fall to zero.
Summing up, we can say that the law of diminishing utility, like other laws of Economics, is simply a statement of tendency. It holds good provided other factors remain constant.