The principle of diminishing marginal utility says that:
A) as more of a good or service is consumed, demand decreases.
B) as more of a good or service is consumed, the price will rise.
C) the marginal utility of additional units consumed increases.
D) an increase in income causes demand to increase.
E) the marginal utility of additional units consumed decreases.

Question

Quizplus · Accepted Answer

The principle of diminishing marginal utility states that as someone consumes more of a good or service, the additional satisfaction (or utility) they receive from each additional unit consumed decreases. In other words, the marginal utility of additional units consumed decreases. This helps to explain why demand curves are downward-sloping - as the price of a good or service increases, the marginal utility of consuming another unit decreases, so consumers are willing to buy fewer units at higher prices.

The Principle of Diminishing Marginal Utility Says That