Question

Why should a consumer purchase more of a commodity when MU must decline as consumption of
the commodity increases?​

Answer 1

Answer:

There are two aspects to this -

o Marginal utility (MU) is the additional utility you get from having an extra unit of a commodity. Declining MU doesn’t mean that it is not adding to your utility (Of course assuming MU > 0).

o Secondly, individuals make decisions on consumption by comparing marginal utility and price of a commodity.

Till the time, MU from a unit > Price , a rational individual will keep on consuming even if MU has declined from what it was before. This is because utility that I am getting from this particular unit is still higher than the cost that I have to pay for it.