What phenomenon describes the decrease in additional satisfaction as more units of a good are consumed?

The correct answer describes the concept of Diminishing Marginal Utility, which refers to the decrease in the additional satisfaction or utility a consumer derives from consuming each additional unit of a good or service. As an individual consumes more units of a product, the pleasure or satisfaction gained from each extra unit tends to diminish. For instance, imagine eating slices of pizza; the first slice may provide a lot of enjoyment, the second slice may still be enjoyable but to a lesser extent, and by the fourth or fifth slice, the enjoyment may significantly decrease or even become negative if one is overly full.

This principle is a foundational element in consumer choice theory, illustrating how consumers allocate their resources based on the satisfaction derived from different goods. It highlights why consumers typically diversify their consumption instead of purchasing multiple units of the same item, as they seek to maximize their total satisfaction across a range of products rather than just one. Understanding this concept is crucial in analyzing consumer behavior and how it influences demand for goods.