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According to the law of diminishing marginal utility, _________?
- a)Additional consumption always yields extra utility
- b)Additional consumption leads to lower average total utility
- c)After a point any addition in the consumption causes a reduction in total utility.
- d)Additional consumption always yields negative utility
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
According to the law of diminishing marginal utility, _________?a)Addi...
As per law of dimnishing marginal utility, as the consumer goes on conuming MU derived from each succesive unit goes on falling,becomes zero and finally turns negative
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According to the law of diminishing marginal utility, _________?a)Addi...
The law of diminishing marginal utility states that as an individual consumes more units of a good or service, the additional satisfaction or utility derived from each additional unit decreases. This principle helps explain consumer behavior and choices in economics.
Explanation:
Diminishing Marginal Utility:
- As a person consumes more of a good or service, the marginal utility derived from each additional unit decreases. This means that the satisfaction or benefit gained from consuming an additional unit diminishes over time.
Reduction in Total Utility:
- Following the law of diminishing marginal utility, after a certain point, any additional consumption causes a reduction in total utility. This is because the increase in satisfaction from consuming more units eventually levels off and may even turn negative.
Example:
- For instance, if someone is eating ice cream, the first scoop may bring a lot of satisfaction. However, as they continue to eat more scoops, the enjoyment derived from each additional scoop diminishes. Eventually, they may reach a point where they start to feel full or even sick from consuming too much ice cream, leading to a decrease in total utility.
Implications:
- Understanding the law of diminishing marginal utility is crucial for businesses and policymakers. It helps in determining optimal pricing strategies, production levels, and resource allocations to maximize overall utility and consumer welfare.
In conclusion, the law of diminishing marginal utility highlights the importance of moderation in consumption and the diminishing returns associated with excessive consumption of goods or services.
Explanation:
Diminishing Marginal Utility:
- As a person consumes more of a good or service, the marginal utility derived from each additional unit decreases. This means that the satisfaction or benefit gained from consuming an additional unit diminishes over time.
Reduction in Total Utility:
- Following the law of diminishing marginal utility, after a certain point, any additional consumption causes a reduction in total utility. This is because the increase in satisfaction from consuming more units eventually levels off and may even turn negative.
Example:
- For instance, if someone is eating ice cream, the first scoop may bring a lot of satisfaction. However, as they continue to eat more scoops, the enjoyment derived from each additional scoop diminishes. Eventually, they may reach a point where they start to feel full or even sick from consuming too much ice cream, leading to a decrease in total utility.
Implications:
- Understanding the law of diminishing marginal utility is crucial for businesses and policymakers. It helps in determining optimal pricing strategies, production levels, and resource allocations to maximize overall utility and consumer welfare.
In conclusion, the law of diminishing marginal utility highlights the importance of moderation in consumption and the diminishing returns associated with excessive consumption of goods or services.
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Community Answer
According to the law of diminishing marginal utility, _________?a)Addi...
B and C imply the same thing- utility diminishes
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According to the law of diminishing marginal utility, _________?a)Additional consumption always yields extra utilityb)Additional consumption leads to lower average total utilityc)After a point any addition in the consumption causes a reduction in total utility.d)Additional consumption always yields negative utilityCorrect answer is option 'C'. Can you explain this answer?
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