Question

The law of diminishing marginal utility applies to __________.

• A. government spending
• B. operations of the firm
• C. household consumption
• D. all of the above

Answer 1

Answer: (C)

household consumption

The law of diminishing marginal utility applies to household consumption as because generally, it is seen as the household increases the consumption of a particular good, the marginal utility tends to decline because the household is willing to sacrifice much lesser amount of one good for consuming one additional unit of another good.