Which of the following happens as more of a good or a service is consumed in a given period of time, according to the principle of marginal analysis?

• A. The marginal benefit of consuming additional units tends to decrease.
• B. The marginal benefit of consuming additional units tends to increase.
• C. Total utility decreases with each additional unit consumed.
• D. The marginal cost of production always decreases.

Answer: (A)

Verified step by step guidance

1. Understand the principle of marginal analysis, which examines the additional benefits and costs of consuming or producing one more unit of a good or service.
2. Recall the concept of marginal benefit, which is the extra satisfaction or utility gained from consuming an additional unit of a good or service.
3. Recognize that according to the law of diminishing marginal utility, as more units of a good or service are consumed within a given period, the marginal benefit from each additional unit tends to decrease.
4. Distinguish marginal benefit from total utility: total utility is the overall satisfaction from all units consumed, which may increase but at a decreasing rate, while marginal benefit focuses on the change from one more unit.
5. Note that marginal cost relates to production costs and is not directly about consumption benefits; thus, the marginal cost of production does not necessarily decrease as consumption increases.