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Explain why it is that as the consumer purchases more of a good, her marginal utility...

Explain why it is that as the consumer purchases more of a good, her marginal utility falls while her total utility rises.

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Answer #1

As consumers consume more of a commodity, its marginal utility falls while total utility rises because of the law of diminishing marginal utility.

A consumer consumes a commodity only till the point where its consumptions add to his overall utility. If, for example, consuming the first glass of water gives the thirsty consumer a utility of 10 utils, another glass a utility of 8 utils, third a utility of 6 utils etc. then he will keep on drinking water till the time his total utility from consumer water is 0.

Clearly, as he keeps on adding to his total utility with every additional glass of water, his marginal utility is falling (-2 with every glass). This is because every additional glass of water is not as valuable to him as the first (he may not feel thirsty afterwards, or may even feel full).

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