A basic hypothesis of marginal utility theory is that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases. This hypothesis is known as
A) utility maximization.
B) the law of diminishing marginal utility.
C) the law of diminishing total utility.
D) the paradox of value.
E) the utility theory of demand.

Question

Quizplus · Accepted Answer

The hypothesis that utility derived from successive units of a good diminishes as consumption increases is known as the law of diminishing marginal utility. This is a fundamental principle of marginal utility theory, which helps explain the downward-sloping shape of the demand curve. While utility maximization and the utility theory of demand are related concepts, they do not specifically refer to the idea that marginal utility diminishes. The law of diminishing total utility is a related concept, but it specifically refers to the idea that total utility will eventually decline as consumption increases, not just the marginal utility of each additional unit. The paradox of value is not specifically related to marginal utility theory.

A Basic Hypothesis of Marginal Utility Theory Is That the Utility