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What is the law of diminishing marginal utility?

The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is the incremental increase in utility that results from the consumption of one additional unit. "Utility" is an economic term used to represent satisfaction or happiness .

What happens if a consumer violates the law of diminishing marginal utility?

A consumer might make an irrational decision; there could be intervals between the consumption of units of a good, etc. Violating these assumptions might cause the law to not hold for a certain situation. The law of diminishing marginal utility is widely studied in Economics.

What is an example of diminishing marginal utility?

Here’s an example of diminishing marginal utility regarding vehicles: A vehicle is an expensive purchase that a consumer may make only a few times in their lifetimes. Since vehicles decrease in value and quality as consumers use them, they're a practical example of the law of diminishing effect of marginal utility.

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