Yes, diminishing marginal utility function explains the
purchasing decisions.
Diminishing marginal utility or law of diminishing marginal utility
refers to the decrease in the satisfaction level of consumers when
they consumed every additional or extra unit of the same product.
Example - If Anny is consuming a chocolate flavor ice-cream, then
the satisfaction level of consumption of chocolate ice-creams is
high on the first day. But after each day, the satisfaction level
decreases. Due to this, Anny will shift (change purchasing
decision) to buy other flavors (vanilla, creamy, etc.) ice-cream at
a given income.
Get Answers For Free
Most questions answered within 1 hours.