The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-The law of diminishing marginal utility does not hold good when the good is free or priced at zero dollars.

Question

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-The law of diminishing marginal utility does not hold good when the good is free or priced at zero dollars.

Quizplus · Accepted Answer

The law of diminishing marginal utility applies regardless of the price of the good, including when it is free, as it describes the decrease in satisfaction or utility that a consumer derives from each additional unit of consumption, not the cost of the good.

The Below Figure Shows the Various Combinations of the Goods