Question

1. Think of a time when you experienced diminishing marginal utility?

2. Explain in detail how and why your marginal utility diminished upon continued consumption of the good/service.

3. What happened to your total utility as you continued to consume the product? At which point did you reach your maximum total utility?

4. Explain how diminishing marginal utility might affect the price of additional units of consumption of a product and try to provide a real-life example.

Answer 1

1. When i was playing a PC game, World of Warcraft.

2.Well on the 1st hour of playing, it was quite entertaining, but by the 4th hour of continuous playing, elements like eye fatigue and hunger reduced my eagerness to play.

3. The total utility continued to rise on the first 2 hours, after that till the 4th hour , I experienced a decreasing increase of total utility i.e decreasing marginal utility. on the 4th hour, the marginal utility became zero and i stopped playing.

4. Diminishing marginal utility reduces the price of a product or service, as addition consumption takes place the buyer becomes less likely to buy at the same price, a decrease in price can offset the decreasing marginal utility.

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