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Questions and Answers
What does the Law of Diminishing Marginal Utility state?
What does the Law of Diminishing Marginal Utility state?
- As a consumer consumes more units of a specific product, the marginal utility remains constant.
- As a consumer consumes more units of a specific product, the additional utility from each additional unit decreases. (correct)
- As a consumer consumes more units of a specific product, the total utility decreases.
- As a consumer consumes more units of a specific product, the total utility increases at a decreasing rate.
How does the Law of Diminishing Marginal Utility relate to consumption?
How does the Law of Diminishing Marginal Utility relate to consumption?
- It helps in understanding how consumer preferences change over time.
- It explains how consumption patterns can lead to overspending.
- It explains why consumers tend to consume more of a product when its price increases.
- It describes the relationship between the consumption of a good and the satisfaction derived from it. (correct)
What impact does the Law of Diminishing Marginal Utility have on pricing and demand?
What impact does the Law of Diminishing Marginal Utility have on pricing and demand?
- It supports the concept of price discrimination based on consumer satisfaction.
- It results in an increase in demand as the marginal utility decreases.
- It explains why demand decreases as prices decrease for certain goods. (correct)
- It leads to higher prices for goods with high marginal utility.
True or false: The Law of Diminishing Marginal Utility states that as a person consumes more of a good or service, the additional satisfaction or utility from each additional unit decreases?
True or false: The Law of Diminishing Marginal Utility states that as a person consumes more of a good or service, the additional satisfaction or utility from each additional unit decreases?
True or false: The Law of Diminishing Marginal Utility applies only to goods and not services?
True or false: The Law of Diminishing Marginal Utility applies only to goods and not services?
True or false: The Law of Diminishing Marginal Utility is a fundamental concept in economics that helps explain consumer behavior?
True or false: The Law of Diminishing Marginal Utility is a fundamental concept in economics that helps explain consumer behavior?
The Law of Diminishing Marginal Utility states that as a person consumes more of a good or service, the additional satisfaction or utility from each additional unit ______
The Law of Diminishing Marginal Utility states that as a person consumes more of a good or service, the additional satisfaction or utility from each additional unit ______
The Law of Diminishing Marginal Utility is a fundamental concept in ______ that helps explain consumer behavior
The Law of Diminishing Marginal Utility is a fundamental concept in ______ that helps explain consumer behavior
The Law of Diminishing Marginal Utility applies not only to goods, but also to ______
The Law of Diminishing Marginal Utility applies not only to goods, but also to ______
Study Notes
Law of Diminishing Marginal Utility
- States that as a person consumes more of a good or service, the additional satisfaction or utility from each additional unit decreases.
- Is a fundamental concept in economics that helps explain consumer behavior.
- Applies not only to goods, but also to services.
Relationship to Consumption
- The law helps to explain why people consume a variety of goods and services, rather than just consuming more and more of a single good.
- As consumption increases, the marginal utility of each additional unit decreases, making consumers less likely to consume more.
Impact on Pricing and Demand
- As the marginal utility decreases, consumers are willing to pay less for additional units of the good.
- This leads to a downward-sloping demand curve, as the quantity demanded increases as the price falls.
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Description
Test your knowledge about the Law of Diminishing Marginal Utility with this quiz. Learn about its implications on consumption, pricing, and demand.
