What does the law of diminishing marginal utility state?

The law of diminishing marginal utility states that as a consumer increases the quantity of a good consumed, the additional satisfaction (or utility) derived from consuming each additional unit of that good will eventually decrease. This concept highlights that while the first few units of a product may bring substantial satisfaction, each subsequent unit typically provides less and less added satisfaction.

For example, consider eating slices of pizza. The first slice may provide a great deal of enjoyment, the second slice may still be enjoyable, but as you continue to eat more slices, the additional satisfaction from each subsequent slice decreases. This illustrates the principle of diminishing marginal utility, where the consumer's experience of utility diminishes as consumption increases beyond a certain point.

The other options do not accurately describe this economic principle. The idea that utility always increases with consumption contradicts the law itself, as it overlooks the eventual decline in additional satisfaction. Similarly, the notion that utility decreases as consumption decreases does not represent how marginal utility operates, since utility can still be high even if consumption is reduced. Lastly, saying that marginal utility is constant regardless of consumption fails to capture the dynamic nature of utility as consumption levels change.