The satisfaction which people derives from consuming goods is called utility. The utility of a commodity diminishes over time. For example: when you first consume a ladoo, the utility would be higher because you're hungry. After then if you eat another ladoo , the utility of ladoo decreases because you're not as hungry as you were before . As you increase the consumption of ladoo ,the utility will further become less and less. This concept in economics is referred to as 'principal of diminishing marginal utility'. It states that with increase in consumption of a good, the utility derived from consuming the good decreases.
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