CMA Foundation · Fundamentals of Business Economics and Management · Utility, Wealth, Production
Which of the following is a recognised exception to the law of diminishing marginal utility?
Accumulating a hobby collection such as rare coins is a recognised exception, because each added item may increase satisfaction instead of reducing it. Food, water and identical shoes consumed in quick succession follow the law of diminishing marginal utility.
- AAccumulating a hobby collection such as rare coins, where each added coin may raise satisfactionCorrect
- BEating a fourth plate of biryani at one sitting
- CDrinking water continuously after a long walk
- DBuying a sixth pair of identical shoes in one day
Explanation
Exceptions commonly cited include collections of rare items like coins or stamps, and sometimes money and music. Consumption of ordinary goods such as food, water or identical shoes in quick succession follows the law.
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