Understanding the Law of Diminishing Marginal Utility

The question asks about the core principle of the Law of Diminishing Marginal Utility when a consumer consumes increasing quantities of a specific commodity.

Defining Marginal Utility and Total Utility

To understand this law, let's define the key terms:

• Total Utility: This refers to the overall satisfaction or benefit a consumer gets from consuming a certain total amount of a good or service.
• Marginal Utility: This is the additional satisfaction or benefit gained from consuming one *extra* unit of a good or service. It's the change in total utility resulting from consuming one more unit.

Explaining the Law of Diminishing Marginal Utility

The Law of Diminishing Marginal Utility is a fundamental concept in microeconomics. It states that as a person increases their consumption of a good or service, the marginal utility gained from each successive unit of that product will eventually decrease, assuming all other factors remain constant. In simpler terms, while consuming more generally increases total satisfaction, the amount of *extra* satisfaction you get from each additional item tends to get smaller.

For example, imagine eating slices of pizza. The first slice might give you immense satisfaction (high marginal utility). The second slice is still good, but perhaps slightly less satisfying than the first (lower marginal utility). By the fifth or sixth slice, you might feel quite full, and the additional satisfaction from eating another slice could be very small, or even negative if you feel sick!

Analyzing the Options

Let's look at why the other options are incorrect based on this law:

• Option 1: Marginal utility derived from each additional unit decreases. This statement perfectly matches the definition of the Law of Diminishing Marginal Utility. As consumption increases, the utility gained from each *extra* unit goes down.
• Option 2: Total utility increases at an increasing rate. This is incorrect. While total utility usually increases as long as marginal utility is positive, the law states that the *rate* of increase slows down because marginal utility is diminishing, not increasing. Total utility increases at a *decreasing* rate.
• Option 3: Total utility decreases. This only happens when the marginal utility becomes negative (i.e., consuming more actually makes the consumer worse off). The law itself focuses on the decrease in *additional* satisfaction, not necessarily a decrease in total satisfaction.
• Option 4: Marginal utility remains constant. This directly contradicts the law, which explicitly states that marginal utility diminishes (decreases) with increased consumption.

Conclusion

Based on the definition and explanation, the Law of Diminishing Marginal Utility clearly indicates that the satisfaction gained from each subsequent unit consumed will decrease.