Question

Diminishing marginal utility:a. occurs when a consumer buys more of a good as a result of a relative price change.b. occurs when the additional utility for each good declines as consumption increases.c. occurs when there is a change in purchasing power as a result of a change in the price of a good.d. is the additional satisfaction derived from consuming one more unit of a good or service.e. is the combination of goods and services that maximizes utility for a given income.

Answer 1

Answer:

The correct answer is option b.

Explanation:

The marginal utility is the utility derived from the consumption of each additional unit of the good.

The diminishing marginal utility means the decline in the marginal utility derives from the consumption of a good with each additional unit of good consumed.

It has been observed that as an individual consumes a good the utility or satisfaction derived from the consumption of each unit is lower than the previous unit.