Which of the following statements describes the principle of diminishing marginal utility?
A) Constant additions to monetary amounts result in less and less increased utility.
B) Trivial or marginal prizes offered in a gamble reduce its monetary value.
C) Total utility increases proportionally with every additional gamble played.
D) The value of a gamble diminishes as more and more people become interested in it.

Question

Quizplus · Accepted Answer

The principle of diminishing marginal utility states that as a person consumes more and more of a product, the additional satisfaction (utility) they get from each additional unit of the product decreases. This means that constant additions to monetary amounts (such as a salary increase) result in less and less increased utility for the person, and eventually the person may not value the additional money at all. Therefore, choice A is the best choice.

Which of the Following Statements Describes the Principle of Diminishing