Question

25. Leopoldo loved his first slice of cake, he enjoyed his second slice of cake, and he felt a bit sick after his third slice of cake. This illustrates the concept of... a. a budget line. b. diminishing marginal utility. c. consumer sovereignty. d. a consumer society. e. the paradox of choice.

Answer 1

Answer: Option(B) is correct.

Explanation:

Correct Option: Diminishing marginal utility.

Diminishing marginal utility states that as the consumer consumes more and more units of a commodity the utility derived from an additional unit goes on diminishing.

For example; if a consumer consumes an ice-cream. The first scoop gives him 100% satisfaction, second scoop gives him 70%, third scoop gives him 40% and so on...

So, utility derived from an additional unit goes on diminishing.