The utility function is constructed in such a way that consumption exhibits diminishing marginal utility.

Name: The utility function is constructed in such a way that consumption exhibits diminishing marginal utility.
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Question

Quizplus · Accepted Answer

The concept of diminishing marginal utility suggests that as consumption increases, the additional satisfaction or utility gained from each additional unit consumed decreases. This is often reflected in the shape of a downward-sloping utility function. Therefore, the statement is true.

The Utility Function Is Constructed in Such a Way That