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Question
Marginal utility diminishes as consumption of commodity _________.
Marginal utility diminishes as consumption of commodity _________.
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Solution
The correct option is A increases
Marginal Utility derives its value from the consumption of extra unit. It is the satisfaction level of a consumer which he gains from the use of every successive unit of commodity, but it starts diminishing when there is over consumption while other factors remains constant and it known as law of diminishing marginal utility. In simple words when a consumer is over satisfied then MU starts decreasing.
Marginal Utility derives its value from the consumption of extra unit. It is the satisfaction level of a consumer which he gains from the use of every successive unit of commodity, but it starts diminishing when there is over consumption while other factors remains constant and it known as law of diminishing marginal utility. In simple words when a consumer is over satisfied then MU starts decreasing.
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