Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee:

Question

Quizplus · Accepted Answer

We typically expect goods to satisfy the law of diminishing marginal utility. That is, as our consumption increases, the additional utility gained from consuming an additional unit of a good will fall. Thus, as Pablo's consumption of coffee increases, we would expect MUc/Pc to fall.

Let MUc Denote the Marginal Utility That Pablo Receives from a Cup