Question : Which of the following is the basis of diminishing marginal utility?
Option 1: Law of supply
Option 2: Laws of return
Option 3: Law of demand
Option 4: None of the above
Answer (1)
23rd Jan, 2024
Correct Answer: Law of demand
Solution :
The Law of Demand is based on diminishing marginal utility. When the price of a good falls, a downward-sloping marginal utility curve implies that consumers must purchase more of the good in order for its marginal utility to fall and become equal to the new price.
Hence c will be the correct answer.
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