Correct Response: A. The law of diminishing marginal utility states that the more a person consumes of a product, the less utility the person derives from the product. Of the given situations, the best example is when a person eats dinner at a particular restaurant three days in a row. His or her desire to consume food at the same restaurant diminishes by a little more each day. By the fourth day, he or she may decide to eat somewhere entirely different. Response (B) is an example of operating costs. Response (C)is an example of decreasing unit costs as production increases. This occurs because the same fixed costs are spread over more units, reducing the cost to make each unit. The decline stage is the last stage of the product life cycle and corresponds to the time when consumers stop buying a product (D).
