Question

Law of diminishing marginal utility states that ____________.

• A. with successive increase in consumption of additional units, marginal utility also increases
• B. with successive increase in consumption of additional units, marginal utility decreases
• C. with successive increase in consumption of additional units, marginal utility remains constant
• D. with successive increase in consumption of additional unit, marginal utility first increases then decreases

Answer 1

The correct option is B with successive increase in consumption of additional units, marginal utility decreases

Law of diminishing marginal utility states that with the increase in consumption, the marginal utility gets decreased .This happens because in two commodity case a consumer is willing to sacrifice less of one good for consuming an additional unit of another good.