Question

What does the Law of Diminishing Marginal Utility state?

Options

• Additional units of a good provide more satisfaction

• Each extra unit consumed gives less satisfaction

• Total utility always increases with each unit

• Marginal utility never becomes negative

Answer 1

Each extra unit consumed gives less satisfaction

Explanation:

The law states that as a person consumes more units of the same good, each extra unit gives less satisfaction than the previous one.