Question

subject macroeconomics Do you think that diminishing marginal utility function explains the purchasing decisione come Justify...

subject macroeconomics

Do you think that diminishing marginal utility function explains the purchasing decisione come Justify . (Short answer)

Homework Answers

Answer #1

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.

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