Question 12
Theory of Consumer BehaviourThe law of diminishing marginal utility indicates that if a consumer increases his consumption of a commodity continuously, his
- A.total utility must fall
- B.marginal utility must fall
- C.marginal utility may rise even though his total utility is falling
- D.marginal utility may fall even though his total utility may be rising
Show the answer and explanation
Answer: B (marginal utility must fall)
Explanation
The law states that each additional unit gives less satisfaction than the one before, so marginal utility falls as consumption goes on.