economics medium MCQ

According to the Law of Diminishing Marginal Utility, as a consumer consumes more and more units of a specific commodity continuously:

  1. The total utility derived from the commodity becomes negative immediately
  2. The marginal utility (additional satisfaction) derived from each successive unit declines
  3. The price the consumer is willing to pay for each unit increases
  4. The consumer's total income must proportionately increase

Answer: The marginal utility (additional satisfaction) derived from each successive unit declines

This law explains the downward slope of the demand curve. The first slice of pizza provides immense satisfaction (high marginal utility). The second slice is enjoyable but less so. By the fifth slice, the marginal utility might approach zero or even become negative (discomfort). Because consumers derive less satisfaction from additional units, they will only buy more if the price is lowered.

Topic Microeconomics - Consumer Behavior
Exam Relevance UPSC Prelims, SSC CGL
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