The Law of Diminishing Marginal Utility states that as a consumer consumes more units of a good or service, the satisfaction or utility derived from each additional unit decreases. This means that the more of a product an individual consumes, the less value they place on each additional unit. For example, imagine you are extremely hungry and you haven taken a single bite of a delicious pizza. The first bite would give you immense satisfaction. However, as you continue to consume more slices of pizza, the satisfaction you derive from each additional slice decreases. Eventually, you may reach a point where the next slice of pizza actually decreases your overall satisfaction due to feeling overly full. Understanding the Law of Diminishing Marginal Utility is important for businesses to determine pricing strategies and for consumers to make informed choices about their consumption habits. It helps explain why prices of goods can vary and why consumers may choose to purchase one product over another. By recognizing how our satisfaction diminishes with each additional unit consumed, we can make more rational decisions about how we allocate our resources.