The Law of Diminishing Marginal Utility - SS2 Economics Past Questions and Answers - page 1
What does the law of diminishing marginal utility state?
As a consumer consumes more units of a good or service, the additional satisfaction or happiness they derive from consuming each additional unit increases.
As a consumer consumes more units of a good or service, the additional satisfaction or happiness they derive from consuming each additional unit remains constant.
As a consumer consumes more units of a good or service, the additional satisfaction or happiness they derive from consuming each additional unit diminishes.
What is an example of the law of diminishing marginal utility?
A person buying a new car.
A person buying a new house.
A person eating pizza.
What is the relationship between the level of satisfaction and the number of units consumed according to the law of diminishing marginal utility?
The level of satisfaction increases as the number of units consumed increases.
The level of satisfaction remains the same regardless of the number of units consumed.
The level of satisfaction decreases as the number of units consumed increases.
Why is the law of diminishing marginal utility important in economics?