Which statement best expresses the law of diminishing marginal utility?

• A. As a consumer consumes more units of a good in a given period, the total utility from the good eventually decreases.
• B. As a consumer consumes more units of a good in a given period, the marginal utility gained from each additional unit eventually decreases, holding other factors constant.
• C. As a consumer consumes more units of a good in a given period, the average utility per unit always remains constant.
• D. As a consumer consumes more units of a good in a given period, the marginal utility gained from each additional unit eventually increases, holding other factors constant.

Answer: (B)

Verified step by step guidance

1. Understand the concept of utility: Utility is the satisfaction or benefit a consumer derives from consuming goods or services.
2. Define total utility: Total utility is the overall satisfaction obtained from consuming a certain quantity of a good.
3. Define marginal utility: Marginal utility is the additional satisfaction gained from consuming one more unit of a good, holding other factors constant.
4. Explain the law of diminishing marginal utility: As a consumer consumes more units of a good, the marginal utility from each additional unit tends to decrease, meaning each extra unit adds less satisfaction than the previous one.
5. Distinguish this from total utility behavior: While total utility may increase or eventually plateau, the key point of the law is about the marginal utility decreasing, not total utility decreasing or average utility remaining constant.