Why does a downward-sloping demand curve represent the law of diminishing marginal utility?

A downward-sloping demand curve represents the law of diminishing marginal utility because it shows that as consumption increases, additional satisfaction decreases.

The law of diminishing marginal utility is a fundamental principle in economics that states that as a person increases consumption of a product, while keeping consumption of other products constant, there is a decline in the marginal utility derived from each additional unit consumed. This concept is visually represented by a downward-sloping demand curve.

To understand this, let's consider an example. Imagine you are very thirsty on a hot day and you buy a bottle of water. The first sip of water provides you with a high level of satisfaction, or utility. However, as you continue to drink, each subsequent sip provides you with less additional satisfaction than the one before. By the time you finish the bottle, you might not even want another one because the additional satisfaction you would get from drinking more water is now quite low. This is the law of diminishing marginal utility in action.

The downward-sloping demand curve in a graph represents this concept. On the x-axis, we have the quantity of a good or service consumed, and on the y-axis, we have the price that consumers are willing and able to pay for it. As the quantity consumed increases, the price that consumers are willing to pay decreases, reflecting the diminishing additional satisfaction they get from consuming more of the good or service.

This relationship between price and quantity demanded is fundamental to the law of demand, which states that, all else being equal, as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases. This is because as the price falls, more consumers are able to afford the product, and the additional satisfaction they get from consuming it outweighs the cost. Conversely, as the price rises, fewer consumers can afford the product, and the additional satisfaction they get from consuming it does not outweigh the cost.

In conclusion, the downward-sloping demand curve is a visual representation of the law of diminishing marginal utility, showing how additional satisfaction decreases as consumption increases.