Utility theory assumes that marginal utility:
A) increases as an individual consumes more of a product.
B) decreases as an individual consumes more of a product.
C) is zero as long as the individual derives utility from the product.
D) is constant as long as the individual derives utility from the product.
E) is constant as long as the individual derives satisfaction from the product.

Question

Quizplus · Accepted Answer

Utility theory assumes that as an individual consumes more of a product, the additional utility (marginal utility) obtained from each additional unit decreases. This is known as the law of diminishing marginal utility, which is a fundamental concept in economics. Therefore, choice B is the correct answer.

Utility Theory Assumes That Marginal Utility