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The law of diminishing marginal utility states that as a consumer consumes more units of a good, holding consumption of other goods constant, the:
Atotal utility eventually declines
Bmarginal utility steadily rises
Cmarginal utility eventually declines
Dtotal utility remains unchanged
Answer & Solution
Correct answer: C. marginal utility eventually declines
1. The law says each successive unit adds less to total utility than the previous unit.
2. It is the marginal utility, not the total utility, that declines as consumption rises.
3. Total utility keeps rising while MU is positive, ruling out the options that claim TU falls or stays unchanged or that MU rises.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.4_
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