Which statement best illustrates the concept of diminishing marginal utility?

• A. A firm increases production as long as marginal cost is less than marginal revenue.
• B. As a person eats more slices of pizza, each additional slice provides less satisfaction than the previous one.
• C. A person prefers to consume a variety of goods rather than just one type.
• D. A consumer buys more of a product when its price decreases.

Answer: (B)

Verified step by step guidance

1. Understand the concept of diminishing marginal utility: it means that as a consumer consumes more units of a good, the additional satisfaction (utility) gained from each extra unit decreases.
2. Analyze each statement to see if it reflects this idea of decreasing additional satisfaction with increased consumption.
3. The first statement relates to production decisions based on costs and revenues, which is about firm behavior, not consumer satisfaction.
4. The second statement directly mentions that each additional slice of pizza provides less satisfaction than the previous one, which perfectly illustrates diminishing marginal utility.
5. The third and fourth statements describe preferences for variety and price effects on quantity demanded, which are related to consumer behavior but do not specifically illustrate diminishing marginal utility.