Final answer:
The concept representing the idea that additional satisfaction decreases with each additional unit consumed is called 1) diminishing marginal utility. This principle forms part of the larger framework of the law of diminishing returns, which governs consumption and production decisions.
Step-by-step explanation:
The idea that each additional unit offers less additional satisfaction when additional units of a product are consumed is known as diminishing marginal utility. This principle states that as we consume more of a good or service, the utility we get from each additional unit tends to be smaller compared to the utility gained from earlier units. To illustrate, when José buys his first T-shirt, it provides him a high level of satisfaction or 22 utils, but by the time he buys his fourth T-shirt, its utility drops to 18 utils as it is just a spare to use when his preferred clothes are unavailable. This concept is part of the broader law of diminishing returns, which applies to various contexts beyond just the consumption of products.