Question : According to the principle 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.
The principle of diminishing marginal utility states that as a consumer consumes more units of a particular good, the additional satisfaction or utility derived from each additional unit decreases. In other words, the marginal utility of the good diminishes as consumption increases. This means that the consumer will experience a diminishing increase in satisfaction or utility for each additional unit consumed.
Question : According to the law of diminishing marginal utility, as a consumer consumes more of a good:
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
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