My fierce wall by Rachna Shukla https://padlet.com/rachna_shukla15/wxxqgpkknlq4 Made with the strength to succeed en-us 2018-09-15 15:35:19 UTC 2019-09-13 10:58:33 UTC hello@padlet.com Consumers are more often than not influenced by advertising and impulsive choices. To what extent then does the theory of DMU explain consumer behavior ? rachna_shukla15 https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/281705510 2018-09-15 15:35:46 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/281705510 GROUP3 https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/282703007 2018-09-18 05:06:46 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/282703007 David and Ankit https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382508250 The theory of DMU, to a large extent, explains consumer behavior. Under the assumption that consumers will purchase rationally, the more of a good or service consumed reduces the value of the MU to the consumer.

Consumers are prone to the effects of advertising and brand influence. However only to an extent, as consumers are limited by their incomes and their ability to consume, hence their marginal utility diminishes. 

However, brand influence can still effect consumer behavior via the bandwagon effect, consumers may be persuaded to purchase goods they cannot rationally afford, impulsively. This therefore influences the impact that advertising has on consumer behavior]]> 2019-09-11 03:45:26 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382508250 Arjun and Rohan https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382508362 The law of DMU states that the marginal utility of a product decreases as the consumption of it increases. 
DMU can only be used to explain consumer behavior given certain assumptions are made. Firstly, it is assumed consumers are infinitely rational, which is not always the case. For instance, when a new video game releases, everyone rushes to buy the video game, irrespective of whether it fits in their budget, because of the popularity of the video game. This shows that consumers are predictably irrational.]]> 2019-09-11 03:46:08 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382508362 Tianna & Dinah https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382509771 The Law of DMU states that the additional utility we gain from each successive unit of a good decreases with each additional good, ceteris paribus. 

Advertising creates new wants in the markets, and hence shifts the demand curve to the right, increasing the total utility derived from the product. Although the demand curve will shift to the right, consumers’ marginal utility will still start to decrease as consumption increases. This is because even though they experience higher total utility, with each additional unit, their marginal utility will again start to diminish, fulfilling the law of DMU. 

However, the case of impulse buys are an exception to DMU. The law assumes that all consumers act rationally to maximize their MU, whereas impulse buyers are willing to pay different prices for goods and services based on a natural, irrational impulse without taking into consideration how to maximize their MU. They prefer to spend immediately rather than save for the future (known as time preference for consumption). Since these customers act impulsively, there is no way to gather the information required to make the rational choice. As impulse buys are rare and relatively infrequent, we can conclude that in general, the law of DMU is still effective. ]]> 2019-09-11 03:54:29 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382509771 Alizeh https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382516938 The theory of DMU explains consumer behavior as consumers make rational decisions. The theory of DMU suggests that the more a consumer consumes a good the less satisfaction they will receive. Total utility increases but at a decreasing rate until it reaches its maximum level and then declines. Marginal Utility decreases as total utility increases. It is also similar to the law of demand. ]]> 2019-09-11 04:34:50 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382516938 ma https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382645650 2019-09-11 12:30:16 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382645650 Mariha https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382645657 To be influenced by advertising and impulsive choices is human behaviour and while this can increase the desire of a good within consumers, it cannot eliminate the existence of their diminishing marginal utility. As much as a consumer wants a good, once they consume it their want for the second unit of that same good will now be a slightly lower and as this pattern continues the DMU will be evident. Hence, no matter how appealing a good may be the consumer will always have a diminishing marginal utility.]]> 2019-09-11 12:30:17 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382645657 Esha https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382656181 The theory of the DMU explains consumer rationale when faced with consuming successive units of the same good. The theory only partly explains consumer behavior relating to consuming additional units but advertising, marketing and social norms also play a significant role in dictating consumer behavior. The theory is also only valid for most normal goods, and it excepts Veblen Goods, where consumers keep on consuming additional quantities for the social status it gives them. Moreover, the DMU does not explain why a consumer first chooses a particular good to consume, so its role in explaining consumer behavior is pretty limited.  ]]> 2019-09-11 12:48:45 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382656181 Omar https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382775950 The Law of diminishing marginal utility states that, with all things held constant, the more the consumption of a product, the lower the value of the marginal utility to the consumer.  In other words, there is a decline in the satisfaction a consumer gets from consuming one additional unit of a product. The Law of dimnishing marginal utility assumes all consumers are perfectly rational. This is most certainly not the case. A consumer is affected by a multitude of factors when making a decision. One such factor could be advertising, Advertisements can intice customers to consume products which they may have not considered before. However, there are limits to how much a consumer can consume a particular good. Other factors come into play such as, wage ,taxes that limit the amount a consumer can consume. Therefore, marginal utility falls. Moreover, In the case of impulse buys, this is irrational behavior by the consumer.
One example being trending or popular goods. The consumer may buy these goods for the main reason that they are popular and do not consider the fact that they may not recieve maximum satisfaction from consuming the product.]]> 2019-09-11 15:16:42 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382775950 Afreen Abedin https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382852454 The theory of DMU revolves around the consumption of goods and services rationally and how each successive consumption of the good provides lesser levels of utility to a consumer . Like all economic theories certain assumptions have been made to ensure that this theory can be proven to exist. Rational consumer behaviour and the existence of homogenous goods being the two key factors besides which we assume that the consumption of the goods is constant in time. 
However there are always exceptions to cases as such. As aforementioned in the question , strong advertising campaigns ensure customer loyalty and therefore influence their decisions. This may even sometimes cause people to behave irrationally automatically disagreeing with the DMU theory . Moreover as consumer behaviour is effected by other factors such as emotions and their social setting , they may even make impulsive purchases of goods once again disproving the theory  and showcasing how it is almost impossible to be able to constantly predict consumer behaviour . ]]> 2019-09-11 17:04:57 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382852454 Dion & Prince https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382875868 The theory of Diminishing Marginal Utility refers to the reduction in marginal utility benefited by consumers as the available amount of output increases, considering other things stay constant, such as prices. This makes the assumption that all consumers make perfectly rational choices all the time and utility falls at constant rate. Although true to some extent, this may not always be the case, as there are numerous factors that play a significant role in the buying decisions of consumers. One such factor may be Advertising. The marketing of certain products in the form or social media or telemarketing or old fashioned paper-based marketing or simply the influence of high end brands could entice customers to acquire additional units of a product, while total utility increases at a constant or even higher rate. This would cause Marginal utility to sometimes increase rather than fall. Another such factor that is inimical to the theory as impulsive consumer behavior. Consumers making irrational buying decisions may alter the marginal utility gained from each extra unit of output bought. Consumers may even decide to consume goods that are irrational to their circumstances when advertised in the most effective way.]]> 2019-09-11 17:38:10 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382875868 Odud https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382923180
The theory of Diminishing Marginal Utility Cost states that as more units of a certain good are purchased, the satisfaction or more appropriately the utility gained from the extra unit purchased is lesser than the original utility of when the first unit was purchased. In more economic terms, the marginal satisfaction or marginal utility has an inverse relationship with the number of goods bought. 
This is because the nature of human wants is such that we aim for instantaneous gratification. Therefore, after the initial want has been satisfied, the continual utilisation of the service that provides said satisfaction is less desirable. 

The law of diminishing marginal utility says and explains precisely that. Hence, it isn't plausible to assume that as a consumer purchases more units of a good, the demand for extra unit falls due to the falling marginal utility and overall the increase in disposable income required to purchase said extra unit of good. 
On the other hand, the theory's assumptions act as limitations. 
For example; I would not prefer ordering a second plate of the same burger since I just had it and so my taste preference changed. Here, I am behaving rationally as my reason is implicitly based on my diminishing marginal utility of the burger. 
But, my friend would even pay more to get a second burger because he read that protein in burgers is very helpful. Hence, his judgement is based on the information he received and not at all on economic factors. So he is presumed to be behaving irrationally. 

Forehence, answering the original question completely, to what extent the law of DMU holds up relies largely on whether the assumptions of the theory are met. To what degree these assumptions are met. 
But the unfortunate fact is that to rely solely on the theory as expectation for consumer choice is not only ridiculous but also massively inefficient in the long run . 
Since advertising I.e the types of information and the degree to which a consumers preferences have been influenced , do often play a role in consumer choice, it can not be ignored. It wasn't found that Cococola spent over $1 million on advertising campaigns. The numerous ads on tv definitely created an unconscious bias when purchasing soda. Even if a cheaper and better alternative could be available, the psychology of the consumer would still choose the Cola 4 out of 5 times. 
Futhermore impulsive decision making affect rationality and mental condition of the consumer. This again circle backs to the assumptions of the theory. 

Since clearly, as mentioned above, the assumptions of the theory of DMU are not often satisfied, using marginal cost as a complete determinant of effective demand and so consumer choice would prove inaccurate. 
In the many simpler situations where these assumptions are more valid, the theory of diminishing marginal utility cost would be found to be rather logical when describing consumer behaviour.]]> 2019-09-11 18:46:49 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382923180 Nawadita https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382957567 The theory of Diminishing Marginal Costs (DMC) states that with every additional unit purchased and consumed, the utility consumers gain diminishes; given that all other factors remain constant.
 
 However, consumer behaviour cannot always be so simple to forecast, especially will all the other factors that contribute to how they make their decisions:
 1. Income
 2. Price (value of goods attached by the consumers)
 
 Advertising can sway consumers into purchasing certain goods or services that they otherwise might not have considered an option. In many cases consumers may act irrationally in response to such marketing strategies, not taking into account the actual importance/need of the good or the level of utility they will gain once it is consumed. Overall analysing consumer behaviour can be difficult as different people make different decisions. Some consumers may not be as affected by advertisements, due to their personal preferences or other factors as mentioned above, whereas others may go ahead and purchase such goods or services regardless of whether it increases their utility or not. Nonetheless, the theory of DMC proves to be very much effective.]]> 2019-09-11 19:56:22 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/382957567 https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383066444 Zach 
The theory of diminishing marginal utility states that with every additional unit purchased marginal utility falls.
However this concept assumes that Consumer behavior and homogeneous products remain constant, but with factors such as income and advertising make it hard for consumers behavior to remain constant.
Advertising is a business tool which is used to spread awareness About that product l. Advertising can however stimulate new wants that are not necessarily required for survival, which could lead to irrational choices being made And stimulate a higher demand levels which will remove the existence of diminishing marginal utility.
]]> 2019-09-12 04:03:05 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383066444 Priya https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383076647 The theory of Diminishing Marginal Utility suggests that with every additional unit a consumer consumes, he derives less satisfaction from that good, the utility decreases and falls. However, their behavior to rationally purchase products with their income and price in mind is not always reliable. Many consumers desire instantaneous gratification and may make impulsive choices influenced by their wants. This is when they can act predictably irrational for example when buying a new phone simply due to brand loyalty. Another additional factor is advertising as well. However this irrationality is limited as consumers are bounded by their income.       ]]> 2019-09-12 05:13:11 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383076647 prakriti https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383085220 The law of diminishing marginal utility assumes that all consumers make rational-decisions. DMU explains that as consumers consume more units of a good, their satisfaction from consuming the good decreases. A rational consumer will not be willing to pay more- for extra units of a good as the level of satisfaction is lowered. 

In my opinion advertising would influence consumers in the wrong way as they would end up making irrational decisions, after being fully convinced to purchase that particular good. For effective advertising to take place firms will need to know the consumption patterns and behaviour of the consumers towards their products. 

Although consumers still have limited income to spend on goods and services, in such situations it may be impossible for firms to persuade them into purchasing their products.]]> 2019-09-12 06:13:02 UTC https://padlet.com/rachna_shukla15/wxxqgpkknlq4/wish/383085220