If the marginal utility of the 3ʳᵈ cup of coffee is 23 and the marginal utility of the 4ᵗʰ cup is 15, then:
A)it is optimal for the consumer to have 3 cups of coffee.
B)the price of a cup of coffee must be relatively low.
C)it is optimal for the consumer to have 4 cups of coffee.
D)there is evidence of diminishing marginal utility.

Question

Quizplus · Accepted Answer

The fact that the marginal utility of the fourth cup is smaller than that of the third cup reflects diminishing marginal utility.

If the Marginal Utility of the 3ʳᵈ Cup of Coffee