"IGCSE Economics Practice Test 2025 – The Comprehensive All-in-One Guide for Exam Success!"

The principle that states that as a consumer has more of a commodity, the less utility they derive from each additional unit is known as the Law of Diminishing Marginal Utility. This law suggests that as a person consumes more units of a good or service, the satisfaction or pleasure (utility) gained from consuming each additional unit tends to decrease.

For example, consider a person eating slices of pizza. The first slice may bring a great deal of satisfaction, but as they continue to eat additional slices, the enjoyment of each subsequent slice diminishes. This concept is crucial in understanding consumer behavior, as it helps to explain why consumers are willing to pay less for additional units of a good compared to the initial units.

Understanding this principle is essential in economics because it influences demand curves, pricing strategies, and consumption patterns. It shows that consumers make purchasing decisions based on the utility they expect to gain, which typically decreases as they consume more of a single item.