Law of Diminishing Marginal Utility

The Law of Diminishing Marginal Utility states that as a person consumes more units of a good or service, the additional satisfaction or benefit gained from each extra unit tends to decrease. For example, the first slice of pizza brings great enjoyment, but by the fourth or fifth slice, the additional satisfaction is less. This principle helps explain why consumers are willing to pay less for extra units and why demand decreases as consumption increases. Essentially, each additional unit provides less benefit than the previous one, influencing decision-making and resource allocation.