Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It shifts the demand curve to the left as utility increases.
B
It results in a downward-sloping demand curve as additional units provide less satisfaction.
C
It has no effect on the demand curve as long as the budget constraint is not exceeded.
D
It causes the demand curve to become vertical.
Understanding the Answer
Let's break down why this is correct
Answer
Diminishing marginal utility is the idea that as a person consumes more of a good, the additional satisfaction they get from each extra unit decreases. For example, think about eating slices of pizza. The first slice brings a lot of joy, the second slice is still enjoyable, but by the third or fourth slice, the happiness it brings is less than the first. This means that consumers will only buy more of a good if its price is low enough to match the reduced satisfaction they receive. As a result, the demand curve slopes downward: when prices are lower, people are willing to buy more because the extra happiness they get from each additional unit is worth it within their budget.
Detailed Explanation
As people buy more of a product, each extra unit gives them less happiness. Other options are incorrect because This answer suggests that more satisfaction shifts the demand curve left; This answer thinks that budget limits don't matter for demand.
Key Concepts
Diminishing marginal utility
Budget constraint
Demand curve
Topic
Marginal Utility and Consumer Choice
Difficulty
hard level question
Cognitive Level
understand
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