Which statement best illustrates the concept of diminishing marginal utility?

• A. You decide to buy pizza only when its price falls, regardless of how hungry you are.
• B. Your total satisfaction from eating pizza stays exactly the same no matter how many slices you eat.
• C. After eating one slice of pizza you feel very satisfied, but each additional slice adds less extra satisfaction than the previous slice.
• D. Each additional slice of pizza you eat adds more extra satisfaction than the previous slice.

Answer: (C)

Verified step by step guidance

1. Understand the concept of marginal utility, which refers to the additional satisfaction or benefit a consumer gains from consuming one more unit of a good or service.
2. Recognize that diminishing marginal utility means that as a person consumes more units of a good, the additional satisfaction gained from each extra unit tends to decrease.
3. Analyze each statement to see which one reflects this idea: the first statement talks about buying behavior related to price and hunger, which is not about marginal utility directly.
4. The second statement says total satisfaction stays the same regardless of quantity, which contradicts the idea of marginal utility changing with consumption.
5. The third statement describes feeling very satisfied after the first slice, but each additional slice adds less extra satisfaction, perfectly illustrating diminishing marginal utility.