Suppose two out for coffee and donuts at the local donut store.The first donut you eat tastes incredibly good.The second one also tastes pretty good.The third donut seems just okay.With the fourth donut you are turning somewhat green.The fifth donut makes you sick.Your friend,an economist,describes your experience as the principle of:
A)utility maximization.
B)irrationality in consumer behavior.
C)instant gratification.
D)differing tastes and preferences.
E)diminishing marginal utility.

Question

Quizplus · Accepted Answer

The principle at work in this scenario is diminishing marginal utility, which states that as a consumer consumes more and more of a good, the additional satisfaction gained from each additional unit consumed decreases. This is demonstrated by the fact that the first donut tasted incredibly good, but by the fifth donut, it made the consumer sick. Therefore, the best choice is E, which describes this principle.

Suppose Two Out for Coffee and Donuts at the Local