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16 April, 17:58

The law of diminishing marginal utility

1. refers to the decrease in total satisfaction as more units of the good are consumed

2. refers to the fall in additional satisfaction created by consumption of more and more units of a good

3. refers to the idea that total utility is negative

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Answers (1)
  1. 16 April, 18:49
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    The correct answer is option 2.

    Explanation:

    The law of diminishing marginal utility states that keeping other things constant, as more and more units of a commodity are consumed, it will lead to a decrease in the marginal utility derived from the consumption of each additional unit.

    In other words, if a consumer goes on consuming more and more of a commodity, the additional satisfaction derived from the consumption of each unit will decrease.

    The total utility will be maximized when the marginal utility from the consumption becomes zero.
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