Question

Suppose the law of diminishing marginal utility holds for coffee. As a person drinks more coffee during the day, the total utility he or she receives will:

1) increase faster and faster.
2) fall steadily.
3) remain constant.
4) rise, but at slower and slower rates.

Answer 1

Under the law of diminishing marginal utility, as more coffee is consumed, the total utility increases at a decreasing rate because each additional cup offers less satisfaction than the one before.

Step-by-step explanation:

If the law of diminishing marginal utility holds for coffee, as a person drinks more coffee during the day, the total utility he or she receives will rise, but at a slower and slower rate. This is because each subsequent cup of coffee consumed provides less additional utility than the previous one. For instance, while the first cup may greatly increase utility because it is most desired, the fourth cup may add far less utility because the additional satisfaction has decreased with each cup.

This concept is a central tenet of marginal analysis and is directly related to the broader principle of the law of diminishing returns, an essential concept in economics that illustrates the decrease in the marginal benefit from using each additional unit of a good or service. The law of diminishing marginal utility states that as a person drinks more coffee during the day, the total utility he or she receives will rise, but at slower and slower rates. This means that each additional cup of coffee will still provide utility, but the increase in utility will diminish with each additional cup consumed.