The law of diminishing marginal utility helps to explain the:
A) Upward sloping supply curve.
B) Equilibrium price.
C) Downward sloping demand curve.
D) Equilibrium quantity of a good in the marketplace.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility states that as a consumer consumes more and more units of a good, the marginal utility (additional satisfaction) of each additional unit will eventually decrease. This explains why the demand curve is downward sloping – as the price of a good decreases, consumers will demand more of it because the marginal utility of each additional unit is higher.

The Law of Diminishing Marginal Utility Helps to Explain The