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Marginal utility in the field of economics refers to the extra value that each subsequent unit of a product is able to provide to the consumer.
A decreasing marginal utility means that as consumers get more of a product each subsequent unit provides a lesser value to them than the previous unit. This is the primary reason why the price has to decrease in order to increase the number of units of a product purchased by consumers.
So the demand curve which is the graph of price of the product by quantity demanded is a downward sloping curve due to the diminishing marginal utility.
The correct answer here is the demand curve. The law of diminishing marginal utility helps tell us why the demand curve slopes downward.
The law of diminishing marginal utility tells us each unit of something that we consume will tend to be worth less to us than the previous unit. Think about a situation in which you have not eaten all day. You go to a place that sells pizza by the slice. The first slice of pizza will be worth a great deal to you because you are extremely hungry. The second slice will still be worth a lot because you are still hungry, but you are not as hungry as you were before you ate the first slice, so it will not be worth as much. As you keep eating slices of pizza, you will find each one is less valuable to you than the one before it. You get less and less hungry, so you are willing to pay less and less for each slice of pizza.
Think about that first slice. You are extremely hungry and you really need food. You might be willing to pay $2.50 for that piece of pizza because you want food so badly. Once you eat that slice, you aren’t as ravenous. You might only be willing to pay $2.25 for the next slice. As you eat more slices, the price you are willing to pay drops because the benefit you get from each slice drops, too.
This helps explain the downward slope of the demand curve. We are willing to buy a few things at a high price because we need them badly. The law of diminishing marginal utility tells us that each subsequent unit is worth less to us than the one before. Therefore, as the quantity increases, the price we are willing to pay decreases. This is one reason why the demand curve has a negative slope.
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