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Can you summarize the concept of the Law of Diminishing Marginal Utility in this article section in easy terms?


The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility they derive from the product wanes as they consume more and more of that product. For example, an individual might buy a certain type of chocolate for a while. Soon, they may buy less and choose another type of chocolate or buy cookies instead because the satisfaction they were initially getting from the chocolate is diminishing. Understanding the Law of Diminishing Marginal Utility Whenever an individual interacts or consumes an economic good, that individual acts in a way that demonstrates the order in which they value the use of that good. Thus, the first unit that is consumed satisfies the consumer's greatest need. The second unit results in a lesser amount of satisfaction, and so on. For example, consider an individual on a deserted island who finds a case of bottled water that washes ashore. That person might drink the first bottle indicating that satisfying their thirst was the most important use of the water. The individual might bathe themselves with the second bottle, or they might decide to save it for later. If they save it for later, this indicates that the person values the future use of the water more than bathing today, but still less than the immediate quenching of their thirst. This is called ordinal time preference. This concept helps explain savings and investing versus current consumption and spending. The example above also helps to explain why demand curves are downward sloping in microeconomic models since each additional unit of a good or service is put toward a less valuable use.
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The Law of Diminishing Marginal Utility explains that the value people place on goods decreases as they consume more units of it. For example, the satisfaction derived from one bottle of water may quench thirst, but the additional ones do not hold the same value for bathing or saving for the future. The concept explains why people choose to save and invest instead of spending immediately, and why demand curves have a downward slope in microeconomics.