Question

Would you expect marginal utility to rise or fall with additional consumption of a good? Why?

Short answer

We would generally expect the marginal utility to decrease with additional consumption of a good. This is due to the Law of Diminishing Marginal Utility, which suggests that as an individual consumes more units of a good or service, the additional satisfaction obtained from consuming an extra unit typically decreases. This is mainly because people tend to derive less satisfaction from consuming additional units of a good or service they have already consumed to a large extent. Hence, the marginal utility derived from that good usually falls over time. However, there may be exceptions to this principle in certain specific cases.

Step-by-step solution

Define Marginal Utility

Marginal utility is the additional satisfaction that a consumer obtains from consuming one more unit of a good or service. In other words, marginal utility represents the change in total utility arising from a change in the quantity of the good consumed.

The Law of Diminishing Marginal Utility

According to the Law of Diminishing Marginal Utility, as an individual consumes more units of a good or service, the additional satisfaction obtained from consuming an extra unit decreases. This principle states that with every increase in the consumption of a good, the marginal utility derived from that good eventually falls.

Explanation

The Law of Diminishing Marginal Utility is based on the idea that people generally have a fixed preference ranking for different goods and services. As a result, they often derive greater satisfaction from consuming their most preferred good or service than from consuming less preferred items. As more units of a good are consumed, the consumer reaches a point where the satisfaction obtained from consuming additional units is less than the satisfaction obtained from consuming earlier units. This diminishing marginal utility can be explained by the fact that an increase in the quantity of a good consumed leads to a decrease in the intensity of the consumer's preferences for that good.

Example

Consider, for example, a consumer who loves pizza. The first slice of pizza might bring a high level of satisfaction, while by the time they're on the fourth or fifth slice, they may start experiencing diminishing marginal utility. After the sixth or seventh slice, they may even start feeling negative utility or disutility since they may no longer enjoy the pizza and start feeling uncomfortably full.

Conclusion

In conclusion, we would expect the marginal utility to fall with additional consumption of a good. This is because, as more units of a good are consumed, the satisfaction derived from consuming additional units decreases, according to the Law of Diminishing Marginal Utility. This principle is generally applicable to most goods and services, although there can be exceptions in certain cases.