Question

As an individual consumes more units of an item, the person eventually experiences diminishing marginal utility. This means that to increase marginal utility, the person must consume less of an item. Explain the logic of this behavior using the example in Problem 20-1.

Short answer

Consumers should try other types of pizzas and other foods to increase their marginal utility.

Step-by-step solution

Step 1- Introduction

According to the law of diminishing returns, consumer buy a second item at a relatively low price. The law of marginal utility states that additional consumption does not satisfy consumers very much

Step 2- Explanation

Consumers receive higher utility by eating the first pizza and relatively less utility by eating the second pizza. As consumers eat pizza one after another, his marginal utility is less than before.