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Law of Diminishing Marginal Utility (Simple Explanation)
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The Law of Diminishing Marginal Utility is a fundamental concept in economics that explains how the additional satisfaction (utility) gained from consuming one more unit of a good decreases as more of the good is consumed.
As a consumer consumes more units of a good or service, the additional satisfaction derived from each successive unit decreases, assuming all other factors remain constant.
Imagine eating slices of pizza: ● The first slice gives you a lot of satisfaction. ● The second slice is enjoyable but less satisfying than the first. ● By the third or fourth slice , the additional enjoyment might be minimal or even negative (you might feel full or uncomfortable). This decrease in satisfaction with each additional slice illustrates the law of diminishing marginal utility.
The graph of marginal utility typically slopes downward, reflecting the decrease in additional satisfaction as consumption increases.