Don receives 100 utils from consuming two oranges. The utility he derives from consuming the second orange equals 30 utils. Which of the following conclusions is derived from the law of diminishing marginal utility?
A)The marginal utility Don receives from consuming the third orange will be less than 30 utils.
B)The marginal utility Don receives from consuming the third orange will be less than 100, but greater than 30 utils.
C)If the price of oranges decreases, Don will buy fewer oranges, ceteris paribus.
D)The total utility Don receives from consuming the first orange is less than the marginal utility from consuming the first orange.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility states that as a person consumes more of a good, the additional (marginal) utility from each additional unit decreases. Since Don's utility from the second orange is 30 utils, the law implies that the utility from consuming a third orange would be less than 30 utils.

Don Receives 100 Utils from Consuming Two Oranges