Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumers will always purchase the same quantity regardless of price changes.
B
As more units of a product are consumed, the added satisfaction from each additional unit decreases.
C
Higher prices always lead to increased consumption of a good.
D
Diminishing marginal utility does not affect consumer choice.
Understanding the Answer
Let's break down why this is correct
Answer
The principle of diminishing marginal utility explains that as a person consumes more units of a product, the additional satisfaction or "utility" they gain from each extra unit decreases. For example, if you buy one slice of pizza, you might feel very happy and enjoy it a lot. However, if you then eat a second slice, you may still enjoy it, but not as much as the first one. This means that by the time you get to the third or fourth slice, the pleasure you get from each additional slice is less than the one before. Because of this, consumers are likely to decide to stop buying more units when the additional satisfaction no longer feels worth the cost, leading them to limit their purchases to only what gives them the most enjoyment.
Detailed Explanation
As you eat more slices of pizza, each slice gives you less happiness than the one before. Other options are incorrect because Some people think buyers always get the same amount no matter the price; It's a common belief that higher prices make people want more.
Key Concepts
Marginal utility
Diminishing marginal utility
Topic
Marginal Utility and Consumer Choice
Difficulty
medium level question
Cognitive Level
understand
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