Answer:
The law of diminishing marginal utility helps to explain the negative slope of the demand curve and the law of demand. ... If the satisfaction obtained from a good decline, then buyers are willing to pay a lower price, hence demand price is inversely related to quantity demanded, which is the law of demand.
Explanation:
The price a consumer is willing to pay for a good depends on his marginal utility, which declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price decreases for a normal good when consumption increases.
Answer:
How many video games is Kent willing to buy at a price of $45?
Kent is most likely going to buy less of the video game at $45 because of the effect of the Law of Diminishing Marginal Utility.
How does the law of diminishing marginal utility explain his refusal to buy more games at that price?
The Law of Diminishing Marginal Utility will discourage him from buying more because the more Video Games he buys the lesser satisfaction or happiness he derives.
Explanation:
The Law Of Diminishing Marginal Utility states that as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is derived as the change in utility as an additional unit is consumed. Utility is an economic term used to represent satisfaction or happiness.
