Which economic principle explains why additional units of a good provide less satisfaction?

The principle that explains why additional units of a good provide less satisfaction is known as diminishing marginal utility. This concept states that as a consumer consumes more units of a good, the additional satisfaction (or utility) derived from each subsequent unit tends to decrease. Initially, the first few units consumed provide significant satisfaction, but as consumption continues, the utility gained from each additional unit diminishes.

For example, consider eating slices of pizza. The first slice might be very satisfying, as you are hungry, but by the fourth or fifth slice, the satisfaction derived from consuming more decreases. This diminishing return on satisfaction influences consumer choices and demand. When consumers recognize that each additional unit provides less satisfaction, they may adjust their consumption patterns, which can have broader implications for market behavior and pricing.

Understanding diminishing marginal utility is crucial for analyzing consumer behavior in microeconomics, as it helps explain demand curves and consumer choices in relation to goods and services.