Which of the following statements BEST reflects the idea of declining marginal benefit?

AThe more I ate of the candy, the better it tasted.
BAs we purchased more and more lumber, the price kept going up until we could no longer afford to buy the lumber we needed.
COur family really needed our first car, and we got a second car because it was convenient, but we see no reason to buy a third car.
DThe chairs were selling for $20 for the first chair, but the price was reduced by one dollar for each additional chair purchased.

Question

21-05-2015
Business

Answered

Which of the following statements BEST reflects the idea of declining marginal benefit?

AThe more I ate of the candy, the better it tasted.
BAs we purchased more and more lumber, the price kept going up until we could no longer afford to buy the lumber we needed.
COur family really needed our first car, and we got a second car because it was convenient, but we see no reason to buy a third car.
DThe chairs were selling for $20 for the first chair, but the price was reduced by one dollar for each additional chair purchased.

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The answer is C.

The concept of declining marginal benefits means that for every additional (marginal) unit you buy or consume, the benefit you receive decreases (declines).

This is most clearly illustrated in answer choice C, where you get less and less benefit from each additional car you buy. By the third car, there's not even any benefit to buying another.

Answer choice D is tempting because the price declines with each additional unit, but this would be declining marginal cost, not benefit.