Question

Suppose you go out with your friend for coffee and donuts at the local donut store. the first donut you eat tastes incredibly good. the second one also tastes pretty good. the third donut seems just okay. with the fourth donut you are turning somewhat green. the fifth donut makes you sick. your friend, an economist, describes your experience as the principle of:

Answer 1

This is an example of the Law of Diminishing Marginal Utility. This is when there is a diminishing marginal utility as the consumer consumes one more additional product. Marginal utility means the satisfaction the consumer gets when buying the product.