Question

Explain the phrase “Less is more” in terms of Utility and cite 2 examples in your answer.

Answer 1

Less is more because the more we have something the less marginal utility we get from the extra unit of that thing. This is called diminishing marginal utility. According to diminishing marginal utility, everything remaining constant, if we keep consuming more and more units of a commodity, each consecutive unit of that commodity would provide less utility than the earlier unit. For example, while eating pizza, we get the maximum utility from the first slice and we derive less and less utility from every additional slice of pizza. Similarly, while drinking coffee, the first cup gives maximum utility and the consecutive cups give less and less utility.