The principle of diminishing marginal utility implies:
A)indifference curves are concave.
B)indifference curves are convex.
C)indifference curves are straight lines.
D)as your consumption level increases, the marginal utility received from consumption of an additional unit increases.

Question

Quizplus · Accepted Answer

The principle of diminishing marginal utility states that as a person consumes more and more units of a good, the utility or satisfaction received from each additional unit decreases. This leads to a convex shape of indifference curves as the consumer is willing to give up more of one good for an additional unit of the other good to maintain the same level of satisfaction. The principle of diminishing marginal utility states that as a consumer consumes more and more units of a good or service, the additional utility or satisfaction they receive from each additional unit will eventually decrease. This means that the marginal utility curve becomes downward sloping and convex to the origin, which in turn means that the indifference curves are also convex. This is because as the consumer has more units of the good, the decrease in marginal utility for each additional unit consumed becomes greater, resulting in a flatter slope of the indifference curve.

The Principle of Diminishing Marginal Utility Implies