The Principle of Diminishing Marginal Utility: Why Diana Doesn't Drink Five Cups of Coffee
What is the reason why Diana does not drink five cups of coffee at breakfast?
Is it because:
- The marginal utility derived from the fifth cup of coffee is negative.
Answer:
Diana does not drink five cups of coffee at breakfast because the marginal utility derived from the fifth cup of coffee is negative.
Marginal utility refers to the additional satisfaction or benefit obtained from consuming one more unit of a good or service. In the case of Diana, she likely enjoys drinking coffee, but the marginal utility diminishes as she consumes more cups. After drinking four cups of coffee, the marginal utility of the fifth cup becomes negative, meaning it provides less satisfaction or even brings about dissatisfaction. This negative marginal utility could be due to factors like feeling overly caffeinated, experiencing negative physical effects, or simply reaching a point of diminishing returns in terms of enjoyment.
Diana's decision not to drink the fifth cup of coffee demonstrates her rational choice based on the principle of diminishing marginal utility. By recognizing that the additional cup would provide diminishing or negative satisfaction, she opts to forgo it and possibly seeks alternative beverages or activities that would provide greater overall utility.