The second can of Pepsi gives lesser satisfaction to a thirsty boy, its is a clear case of __________.

law of diminishing marginal utility

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law of demand

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law of diminishing returns

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law of supply

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Solution

The correct option is B law of diminishing marginal utility
Marginal Utility derives its value from the consumption of extra unit. It is the satisfaction level of a consumer which he gains from the use of successive units of commodity, but it goes on to fall while other factors remains constant due to over consumption then it is a law of diminishing marginal utility. In simple words when a consumer is over satisfied then MU starts decrease and it is called as law of diminishing marginal utility.

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Similar questions

Q. The second glass of lemonade gives lesser satisfaction to a thirsty boy. This is a clear case of ____________.

Q. Identify which of the following statement is correct and which is incorrect.
A. The marginal utility of a good increase, if the want of the consumer is intensified by consuming a very small quantity of it such as a very little quantity of water given to a very thirsty person.

B. The law of diminishing marginal utility states that as the stock of a commodity decreases with the consumer, its marginal utility to the consumer decreases.

Q. Diminishing marginal returns for the first four units of a variable input is exhibited by which of these total product sequences:

Complete the following table:

$\begin{matrix} Output units & Average fixed cost (Rs) & Marginal cost (Rs) & Average variable cost (Rs) & Average cost (Rs) 1 & 60 & 20 & - & - 2 & - & - & 19 & - 3 & 20 & - & 18 & - 4 & - & 18 & - & - 5 & 12 & - & - & 31 \end{matrix}$

State whether the following statements are true or false. Give reasons for your answer: a. Under diminishing returns to a factor marginal product and total product both increase at a diminishing rate. b. When marginal cost rises, average cost also rises. c. Marginal revenue can never be negative.

Q. Which of the following is a limitation of law of diminishing marginal utility?

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