The statement that "as more of a good is consumed, its extra benefit declines" refers to
A) the law of demand.
B) the law of diminishing marginal product.
C) the law of diminishing marginal utility.
D) the law of comparative advantage.

Question

Quizplus · Accepted Answer

The statement is referring to the law of diminishing marginal utility, which states that as more of a good is consumed, the satisfaction or utility gained from each additional unit of the good decreases. This occurs because individuals allocate the first units of a good towards satisfying their most urgent needs, but as they consume more, the marginal utility of each additional unit decreases as they satisfy less and less urgent needs. The law of demand (A) states that as the price of a good increases, the quantity demanded decreases. The law of diminishing marginal product (B) states that as more of a variable input is added to a fixed input, the marginal product of the variable input eventually decreases. The law of comparative advantage (D) states that countries should specialize in producing goods and services for which they have a lower opportunity cost relative to other countries.

The Statement That "As More of a Good Is Consumed