The law of diminishing marginal utility explains why?

A. the slope of a normal demand curve is negative
B. an abnormal demand curve slopes upwards
C. the slope of a normal demand curve is positive
D. the consumption of inferior goods increases with income

Correct Answer:

Option A – the slope of a normal demand curve is negative

Explanation

In economics, the law of diminishing marginal utility states that the marginal utility of a good or service declines as its supply increases.

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 declines, then buyers are willing to pay a lower price, hence demand price is inversely related to quantity demanded, which is the law of demand.