Question

The Law of diminishing marginal utility states that _______.

• A. with successive increase in consumption of additional unit marginal utility also increases
• B. with successive increase in consumption of additional unit marginal utility also decreases
• C. with successive increase in consumption of additional unit marginal utility remain constant
• D. none of the above

Answer 1

Answer: (B)

with successive increase in consumption of additional unit marginal utility also decreases

• Law of Diminishing Marginal Utility (DMU) states that as we consume more and more units of a commodity, the utility derived from each successive unit goes on decreasing.
  
• People spend their income on various goods because consuming more and more of any one good reduces the marginal satisfaction obtained from further consumption of the same good.