After downing three glasses of lemonade on a hot summer afternoon, Todd says, "You would have to pay me to drink another glass!" This statement best illustrates
A) the law of demand.
B) the substitutability among goods.
C) the law of diminishing marginal utility.
D) that chocolate candy bars are an inferior good.

Question

Quizplus · Accepted Answer

Todd's statement illustrates the law of diminishing marginal utility, which suggests that as a person consumes more of a good, the additional satisfaction (utility) gained from consuming each additional unit decreases. After three glasses, Todd's utility from another glass is so low that he would need to be compensated to drink more.

After Downing Three Glasses of Lemonade on a Hot Summer