The law of diminishing marginal utility:
A) is the tendency of total utility to increase until an individual's budget is no longer constrained.
B) refers to the tendency of marginal utility to decline beyond some level of consumption during a period.
C) indicates that, if a good is inferior, less of it will be purchased when income falls during a period.
D) assumes all goods are normal.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility states that as an individual consumes more of a good or service during a given period of time, the additional satisfaction or utility they derive from each additional unit of the good or service diminishes beyond some point. In other words, the marginal utility of each additional unit of the good declines. This explains why individuals tend to buy less of a good as its price rises, as the marginal utility per dollar spent on the good decreases.

The Law of Diminishing Marginal Utility