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Question

Law of Diminishing Marginal utility is applicable to _________.

A
Intermediate products
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B
Capital goods
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C
Consumer goods
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D
Raw materials
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Solution

The correct option is D Consumer goods
Law of diminishing marginal utility is applicable to the goods which are consumed by the consumers. The law states that as the consumption of a good increases, the marginal utility tends to decline as the consumer is willing to sacrifice much lesser amount of one good in order to consume one additional unit of another good.

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