Question

If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings ofA) the law of demand.B) the law of supply.C) the law of increasing marginal opportunity cost. D) the law of diminishing marginal utility.

Answer 1

Answer:

The correct answer is option D.

Explanation:

The law of demand states that keeping other things constant there is an inverse relationship between quantity demanded and price.

According to the law of increasing marginal opportunity cost with each additional output the marginal opportunity cost to produce next unit of output increases.

While the law of supply states that keeping other things constant there is a direct relationship between price and quantity supplied.

According to the law of diminishing marginal utility, the marginal utility derived from the consumption of each additional unit of good keeps declining as more and more unit of goods is consumed.

So, option D is the correct answer.