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Question

The law of diminishing marginal utility explains economic behavior of a rational consumer.

A
True
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B
False
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Solution

The correct option is A True
The law of diminishing marginal utility states that as a consumer consumes more of the same product in one setting, the satisfaction he/she gains from the product reduces as she consumes more and more of the product. Hence, a rational consumer will stop consuming the product once he/she feels it is causing them dissatisfaction.

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