The Law of Diminishing Marginal Utility Holds That at Some

question 213

True/False

The law of diminishing marginal utility holds that at some point consumption of additional units of a commodity adds less to total utility.

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Definitions:

Marginal Revenue Product

The increased earnings obtained by utilizing an extra unit of a production resource or input.

Perfect Competitor

An ideal market condition where all sellers offer identical products, leading to equal market share and no price control.

Input

Resources used in the process of production, such as labor, materials, and capital.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another more or less expensive one.