Question : According to the law of diminishing marginal utility, as a consumer consumes more of a good:
Option 1: The total utility derived from the good increases at a decreasing rate.
Option 2: The marginal utility derived from the good increases at a decreasing rate.
Option 3: The total utility derived from the good decreases at a decreasing rate.
Option 4: The marginal utility derived from the good decreases at a decreasing rate.
Correct Answer: The marginal utility derived from the good decreases at a decreasing rate.
Solution : The correct answer is (d) The marginal utility derived from the good decreases at a decreasing rate.
According to the law of diminishing marginal utility, as a consumer consumes more of a good, the marginal utility derived from each additional unit of the good decreases. This means that the consumer gets less additional satisfaction or utility from consuming each additional unit of the good. However, it does not necessarily mean that the total utility derived from the good decreases or that it decreases at a decreasing rate. The total utility may still increase as long as the marginal utility is positive, but at a decreasing rate.
Question : The law of diminishing marginal utility states that:
Option 1: Marginal utility increases as consumption increases
Option 2: Total utility decreases as consumption increases
Option 3: Marginal utility decreases as consumption increases
Option 4: Total utility remains constant as consumption increases
Question : The Law of Diminishing Marginal Utility will not hold good if the income of the consumer:
Option 1: Increases
Option 2: Decreases
Option 3: Remains constant
Option 4: Either a) or b)
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