As consumption increases the marginal utility derived from each additional unit declines? yes it declines.
Utility is the amount of satisfaction a person gets from consumption of a certain item.
Definition: -
According to MARSHALL,” The additional benefit a person derives from a given increase of his stock of a thing diminishes with every increase in the stock that he already has.”
Let us understand this through an example: -
Consuming one chocolate may satisfy a person desire. If a second chocolate bar is consumed, the satisfaction of eating that second bar will be less that the satisfaction gained from eating the first, if a third is consumed the satisfaction will be even less.
No
of chocolates
|
Marginal
utility
|
Total
utility
|
1
|
100
|
100
|
2
|
80
|
180
|
3
|
50
|
230
|
4
|
20
|
250
|
5
|
0
|
250
|
6
|
-20
|
230
|
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