Units of quantity consumed Total utility Marginal utility
1 10 10
2 15 5
3 17 2
4 18 1
5 18 0

A. diminishing returns
B. diminishing marginal productivity
C. diminishing marginal utility
D. variable proportion

Correct Answer:

Option C = diminishing marginal utility


The law of diminishing marginal utility explains that all things being the same, as consumption increases, the marginal utility derived from each additional unit of a commodity declines.

What this means is that, as you consume a particular commodity, the satisfaction derived from it increases, but it gets to a point where additional consumption of that particular product will no longer give you as much satisfaction as the first few ones you consumed.

From the table above, the consumer started from 1 unit to five units, and at first, the total utility derived from consuming the product was rising from 10 -> 15 -> 17 -> 18 and remained at 18

However, the marginal utility kept declining after consuming the first unit. It moved from 10 -> 5 -> 2 -> 1 -> 0

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