Answer to Question #291528 in Macroeconomics for Nalyn

Question

Discuss how the law of diminishing marginal utility occurs.

Answer 1

$Solution$

Marginal means incremental value added or gained and utility is value gained or ability to satisfy a given requirement.

The law of diminishing marginal utility states that the marginal utility or utility derived from each additional unit of a given product or service declines as consumption increases.

A good example is food,the first plate satisfies the hunger while additional plates have less value since one is satisfied.