The marginal benefit of each additional unit of a good consumed
A) increases as more is consumed.
B) is always equal to its marginal cost.
C) decreases as more is consumed.
D) will maximize consumer surplus.
E) is equal to the deadweight loss if the unit of the good is not produced.

Question

Quizplus · Accepted Answer

The law of diminishing marginal utility states that the marginal benefit of consuming additional units of a good decreases as more of it is consumed. Therefore, the marginal benefit will decrease as more is consumed, making choice C the correct answer. Choice A is incorrect because the marginal benefit does not always increase as more is consumed. Choice B is incorrect because the marginal benefit may not always be equal to the marginal cost. Choice D is incorrect because maximizing consumer surplus requires consideration of both the marginal benefit and the price of the good. Choice E is incorrect because the deadweight loss is not necessarily equal to the marginal benefit of a unit of a good not produced.

The Marginal Benefit of Each Additional Unit of a Good