Paper 3 · November 2003 · Utility and Consumer Choice
The principle stating that as a consumer consumes successive additional units of a good, the extra utility gained from each additional unit falls is called the law of ___.
Model answer
diminishing marginal utility
Also accepted: law of diminishing marginal utility
Explanation
The law of diminishing marginal utility underpins the downward-sloping demand curve: each extra unit of a good satisfies less additional want than the one before it, so consumers are only willing to buy more at a lower price.
Derived from ZIMSEC Economics Paper 3, June 2004, Q2