Question

As per law of diminishing marginal utility _________.

• A. with increase in consumption of additional unit the additional utility derived decreases
• B. with increase in consumption of additional unit the total utility diminished
• C. with additional unit of consumption additional utiliy also increases
• D. all of the above

Answer 1

The correct option is A with increase in consumption of additional unit the additional utility derived decreases

• Law of Diminishing Marginal Utility (DMU) states that as we consume more and more units of a commodity, the utility derived from each successive unit goes on decreasing.
  
• People spend their income on various goods because consuming more and more of any one good reduces the marginal satisfaction obtained from further consumption of the same good.