Question

The law of diminishing marginal utility states that as the stock of a commodity __________with the consumer, its marginal utility to the consurner _________

• A. Decreases; decreases
• B. Increases; decreases
• C. Decreases; Increases
• D. Increases; Increases

Answer 1

The correct option is B Increases; decreases

When the commodity consumed by a customer increases it is the normal psychological affect that the satisfaction which that commodity is providing to the customer will decrease. Therefore, for every extra unit of consumption of a commodity, marginal utility derived will decrease.