Use the following for questions 23-27.
Exhibit: Total Utility and Marginal Utility from Consumption of Good A

-(Exhibit: Total Utility and Marginal Utility from Consumption of Good A. Marginal utility eventually decreases with the consumption of additional units of good A because of the law of:
A) increasing costs.
B) decreasing total returns.
C) diminishing average returns.
D) diminishing marginal utility.

Question

Use the following for questions 23-27.
Exhibit: Total Utility and Marginal Utility from Consumption of Good A
 
-(Exhibit: Total Utility and Marginal Utility from Consumption of Good A. Marginal utility eventually decreases with the consumption of additional units of good A because of the law of:
A) increasing costs. 
B) decreasing total returns. 
C) diminishing average returns. 
D) diminishing marginal utility.

Quizplus · Accepted Answer

The exhibit suggests that as consumption of good A increases, marginal utility eventually decreases. This is because of the law of diminishing marginal utility, which states that as more units of a good are consumed, the additional satisfaction gained from each additional unit eventually decreases. The other choices (increasing costs, decreasing total returns, and diminishing average returns) do not accurately describe the relationship between consumption and marginal utility.

Use the Following for Questions 23-27