ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The price a consumer is willing to pay for a good depends on its marginal utility, which declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price decreases for a normal good when consumption increases.

Detailed explanation-2: -The law of diminishing marginal utility states that as more of the good is consumed, the additional satisfaction from another bite will eventually decline. The marginal utility is the satisfaction gained from each additional bite.

Detailed explanation-3: -Diminishing marginal utility and the law of demand The law of diminishing marginal utility helps us understand the law of demand. Because consumers will derive less happiness or benefit from additional units of a good, they will only be willing to buy a larger quantity if the price decreases.

Detailed explanation-4: -Understanding Diminishing Marginal Utility The law of diminishing marginal utility directly relates to the concept of diminishing prices. As the utility of a product decreases as its consumption increases, consumers are willing to pay smaller dollar amounts for more of the product.

Detailed explanation-5: -Marginal utility is the added satisfaction a consumer gets from having one more unit of a good or service. The concept of marginal utility is used by economists to determine how much of an item consumers are willing to purchase.