Which law states that marginal utility from consuming each additional unit of a commodity declines as it's consumption increases, while keeping consumption of other commodities constant?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Law of diminishing marginal utility
Law of diminishing marginal utility states that marginal utility from consuming each additional unit of a commodity declines as its consumption increases, while keeping consumption of other commodities constant. For example: satisfaction derived from consuming the 1st glass of water will always be higher than the 3rd glass of water.