Question

_______ states that as the stock of a commodity increases with the consumer, its marginal utility to the consumer decreases.

• A. The law of demand
• B. The law of diminishing marginal rate of substitution
• C. The law of diminishing marginal utility
• D. The law of equi-marginal utility

Answer 1

The correct option is C The law of diminishing marginal utility

The law of diminishing marginal utility states that as the consumption increases the marginal utility derived from the each successive units tends to decline. The consumer is less willing to sacrifice one good to consume one more additional unit of another good at a higher level of consumption.