Sia
Question
Macroeconomics
Posted 10 months ago
Melanie still enjoys drinking jasmine green tea, but she receives less and less additional happiness with each tea she consumes.
What is the term for what the statement above describes?
Choose 1 answer:
(A) Diminishing average utility
(B) Diminishing total utility
(C) Increasing average utility
(D) Increasing total utility
(E) Diminishing marginal utility
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Answer from Sia
Posted 10 months ago
Solution
a
Understanding the Statement: The statement describes a situation where Melanie experiences less satisfaction with each additional unit of jasmine green tea she consumes
b
Identifying the Correct Term: The term that describes this phenomenon is 'diminishing marginal utility', which refers to the decrease in the additional satisfaction or happiness a consumer gets from consuming one more unit of a good or service
Answer
(E) Diminishing marginal utility
Key Concept
Diminishing Marginal Utility
Explanation
Diminishing marginal utility is the decrease in satisfaction or benefit from consuming an additional unit of a good or service as more units are consumed.
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