Economics Marginal Utility Questions Medium
The law of diminishing marginal satisfaction, also known as the law of diminishing marginal utility, states that as a consumer consumes more and more units of a particular good or service, the additional satisfaction or utility derived from each additional unit decreases. In other words, the more of a good or service a person consumes, the less satisfaction they derive from each additional unit.
This law is based on the concept that individuals have limited wants and needs, and as they consume more of a particular good, their desire for additional units decreases. For example, if a person is hungry and eats their first slice of pizza, they will experience a high level of satisfaction. However, as they continue to eat more slices, the satisfaction they derive from each additional slice will gradually decrease.
The law of diminishing marginal satisfaction is a fundamental concept in economics and is used to explain various consumer behaviors and choices. It helps to explain why individuals are willing to pay a higher price for the first unit of a good or service compared to subsequent units. Additionally, it helps to explain why consumers may choose to allocate their limited resources towards different goods and services to maximize their overall satisfaction.