Final answer:
The law of diminishing marginal utility indicates that additional utility decreases as more units of a good are consumed. This is evident for hamburgers and Cokes in the given equations. If the price of hamburgers decreases, their consumption may increase until marginal utility diminishes and a new consumption balance is achieved.
Step-by-step explanation:
The law of diminishing marginal utility indicates that as a consumer consumes more of a good, the additional satisfaction or utility gained from each additional unit tends to decrease. In the case of the marginal utilities of hamburgers (MUH) and Cokes (MUC) provided in the equation MUH = C/H and MUC = H/C, this law can be shown to apply as follows: as more hamburgers are consumed (increasing H), MUH will decrease because the numerator (C) remains constant while the denominator (H) increases. Conversely, as more Cokes are consumed (increasing C), MUC will decrease because the numerator (H) remains constant while the denominator (C) increases. Hence, for both goods, additional consumption leads to lower marginal utility.
When the price of hamburgers (PH) decreases while the price of Cokes (PC) remains unchanged, the consumer may increase the consumption of hamburgers due to the lower cost per unit of utility. If the consumer’s income and the price of Cokes remain constant, the consumer will tend to substitute hamburgers for Cokes to maximize overall utility. However, according to the law of diminishing marginal utility, as more hamburgers are consumed, their marginal utility will decline, potentially leading to an eventual balance in the consumption of both goods.