Question

The law of diminishing marginal utility says that

a)	the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases.

b)	the more of a particular good one consumes, the greater is the utility received from the consumption of that good.

c)	the marginal utility gained by consuming equal successive units of a good will increase as the amount consumed increases.

d)	the more of a particular product one sells, the less utility one receives from selling.

e)	none of the above

Answer 1

Option A.

• We know that a consumers utility Increases when he/she consumes more units of a particular good.
• But this utility Increases only upto a certain point or until a threshold value is reached.
• This is because, the marginal utility eventually starts to decline as he consumes equal successive units or more additional units of that good.
• Hence as the marginal utility diminishes when additional units of a good are consumed, it is termed as the law of diminishing marginal utility.