The law of diminishing marginal returns relate to?
ECONOMICS
WAEC 2015
The law of diminishing marginal returns relate to?
- A. total utility
- B. average utility
- C. total product
- D. marginal utility
Correct Answer: D. marginal utility
Explanation
Marginal utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service. As a consumer consumes more units of a product, the marginal utility derived eventually drops. This relates with the law of diminishing marginal returns which states that, there will be a decrease in the marginal output of a production process as the amount of a single factor of production is incrementally increased, while the amounts of all other factors of production stay constant.
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