The law of diminishing marginal utility is an important concept in economics that explains the relationship between the consumption of a good or service and the satisfaction or utility derived from it. According to this law, as a person consumes more and more units of a good or service, the additional satisfaction or utility derived from each additional unit decreases.

**Illustration:**

Let's consider the consumption of ice cream as an example to understand the law of diminishing marginal utility. Suppose a person consumes the following units of ice cream:

- Unit 1: The first scoop of ice cream provides a high level of satisfaction, let's say 10 utils (a hypothetical unit of measurement for utility).
- Unit 2: The second scoop of ice cream also provides satisfaction, but at a slightly lower level, let's say 8 utils.
- Unit 3: The third scoop of ice cream provides even less satisfaction, let's say 6 utils.
- Unit 4: The fourth scoop of ice cream provides even less satisfaction, let's say 4 utils.
- Unit 5: The fifth scoop of ice cream provides even less satisfaction, let's say 2 utils.

**Diagram:**

The diagram below illustrates the concept of diminishing marginal utility:


In the diagram, the x-axis represents the quantity of ice cream consumed, while the y-axis represents the marginal utility or satisfaction derived from each unit of ice cream. As the quantity consumed increases, the marginal utility decreases, resulting in a downward-sloping curve.

**Explanation:**

The law of diminishing marginal utility can be explained by several factors:

1. Satiation: As a person consumes more of a good, they start to feel satiated or satisfied. The initial units of consumption provide the most satisfaction, but as the person continues to consume, the additional units provide less and less satisfaction.

2. Substitution Effect: As the person consumes more of a good, they may start to substitute it with other goods or services that provide different types of satisfaction. For example, after consuming several scoops of ice cream, the person may start to crave a different dessert or a savory snack.

3. Decreasing Marginal Value: Each additional unit of a good or service has a decreasing marginal value to the consumer. This means that the consumer is willing to pay less for each additional unit, indicating a decrease in the satisfaction derived from it.

Overall, the law of diminishing marginal utility highlights the idea that the more we consume of a good or service, the less satisfaction we derive from each additional unit. This concept is crucial in understanding consumer behavior, demand curves, and the allocation of resources in the economy.