Question

If you continue to purchase shoes, why is there “diminishing marginal utility” after the first pair?

Answer 1

You but the first pair of shoes because you really need shoes. Buying the first pair gives you some utility. At this point, the total utility is the marginal utility..But when you buy the second pair, your total utility will increase but the increade in utility will be lower than the utility you derived from the first pair. This is because your needed the first pair but the second pair was not needed as much as you needed the first pair. That is why your marginal utility will diminish. This is called the law of diminishing marginal utility.