Question 14
Theory of Consumer BehaviourUse the table below (Table I) to answer the question.
Units of quantity consumed | Total Utility | Marginal Utility
0 | - | -
1 | 10 | 10
2 | 15 | 5
3 | 17 | 2
4 | 18 | 1
5 | 18 | 0
Table I illustrates the law of
- A.diminishing returns
- B.diminishing marginal productivity.
- C.diminishing marginal utility.
- D.variable proportion.
Show the answer and explanation
Answer: C (diminishing marginal utility.)
Explanation
Marginal utility falls from 10 to 0 as more units are consumed.