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Marginal Utility and the Marginal Rate of Substitution
Diminishing Marginal Utility
The principle of diminishing marginal utility states that as a person's consumption of a good increases, the additional satisfaction or utility gained from each subsequent unit of that good declines. For example, when an individual has an abundance of free time, the marginal utility of an extra hour is relatively low compared to the marginal utility of a scarcer good like grain.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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Diminishing Marginal Utility
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An individual's total satisfaction (measured in 'utils') from consuming successive cups of coffee on a particular morning is shown in the table below.
Cups of Coffee Total Utility 1 10 2 25 3 35 4 40 5 42 At which point does the principle of diminishing marginal utility first become evident?
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According to the principle of diminishing marginal utility, if a consumer continues to consume additional units of a good, their total satisfaction derived from that good will eventually start to decrease.
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A person is consuming slices of pizza one after another. Based on the principle of diminishing marginal utility, match each consumption stage with the corresponding description of the satisfaction (utility) gained.
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A marketing team is analyzing consumer behavior for a new brand of gourmet cookies. Which of the following customer behaviors most clearly demonstrates the principle of diminishing marginal utility?