Marginal benefit Question content area bottom
A. is the gain to the producer of producing and selling one more unit of a good.
B. increases as more of a good is consumed.
C. is the total benefit from all units consumed.
D. is constant as more of a good is consumed.
E. decreases as more of a good is consumed.
The correct answer and explanation is:
The correct answer is E. decreases as more of a good is consumed.
Explanation:
Marginal benefit refers to the additional satisfaction or utility a consumer receives from consuming one more unit of a good or service. It is crucial in economic theory, particularly when analyzing how individuals or firms make decisions based on the additional benefit they expect from an action.
The principle of diminishing marginal benefit explains that as more units of a good are consumed, the additional benefit gained from each extra unit typically decreases. For example, imagine you’re eating slices of pizza. The first slice gives you significant satisfaction because you’re hungry. The second slice is still enjoyable but offers less additional pleasure than the first. By the time you get to the fourth or fifth slice, the extra satisfaction from each new slice is much smaller than at the beginning. This decrease in additional satisfaction is what economists refer to as diminishing marginal benefit.
This concept is grounded in the Law of Diminishing Marginal Utility, which suggests that after a certain point, the additional units of a good provide progressively smaller increases in overall satisfaction. It reflects how consumer choices are made — they balance the marginal benefit against the marginal cost when deciding whether to consume more of a good. If the marginal benefit of consuming an additional unit falls below the price or cost, individuals may stop consuming that good or switch to something else.
In summary, marginal benefit decreases as more of a good is consumed due to the diminishing returns on satisfaction or utility, which is a central idea in understanding consumer behavior and decision-making.