In the theory of utility,it is assumed that marginal utility:
A)increases as consumption of a product increases.
B)is always zero irrespective of any increase or decrease in consumption.
C)remains constant when consumption of a product increases.
D)diminishes as consumption of a product increases.
E)remains constant when consumption of a product decreases.

Question

Quizplus · Accepted Answer

The theory of utility assumes that as consumption of a product increases, the extra satisfaction obtained from each additional unit decreases. This is known as the principle of diminishing marginal utility. Therefore, the correct choice is D, which states that marginal utility diminishes as consumption of a product increases.

In the Theory of Utility,it Is Assumed That Marginal Utility