The marginal utility curve slopes downwards.

Short Answer

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Answer: A downward-sloping marginal utility curve represents the relationship between consumption and utility, illustrating that as more units of a good or service are consumed, the additional satisfaction derived from each additional unit decreases. This graphical representation is directly related to the Law of Diminishing Marginal Utility, which states that as consumption increases, the marginal utility typically decreases.

Step by step solution

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1. Understanding Marginal Utility

Marginal utility is the additional satisfaction or benefit a consumer receives from consuming one additional unit of a good or service. In economic terms, utility is a way to measure how much satisfaction a person gets from consuming something. As more of a good or service is consumed, the marginal utility typically decreases.
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2. Downward-sloping Marginal Utility Curve

A downward-sloping marginal utility curve means that as more units of a good or service are consumed, the additional satisfaction obtained from each additional unit decreases. This can be represented by a graph with marginal utility on the vertical axis and quantity consumed on the horizontal axis. As the quantity consumed increases, the marginal utility decreases, which causes the curve to slope downwards.
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3. Understanding the Law of Diminishing Marginal Utility

The downward-sloping marginal utility curve is a graphical representation of the Law of Diminishing Marginal Utility. This economic law states that as more units of a good or service are consumed, the additional satisfaction derived from consuming each additional unit will decrease. This phenomenon occurs because each additional unit consumed provides less additional satisfaction than the previous unit.
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4. Real-life Example of Downward-sloping Marginal Utility Curve

An example of a downward-sloping marginal utility curve can be related to eating. Let's say a person is hungry and eats a slice of pizza. The satisfaction derived from consuming the first slice is quite high. However, as the person continues to consume more slices, the additional satisfaction derived from each additional slice will decrease. The downward-sloping curve represents this diminishing additional satisfaction. In conclusion, a downward-sloping marginal utility curve illustrates the Law of Diminishing Marginal Utility, which shows that as more units of a good or service are consumed, the additional satisfaction derived from each additional unit consumed decreases. This can be applied to various real-life examples, such as the satisfaction derived from eating pizza.

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