The correct answer is: C. when more units are consumed, marginal utility diminishes.
Gossen’s second law, also known as the law of diminishing marginal utility, states that as a consumer acquires more of a good, the marginal utility, or additional satisfaction, that the consumer derives from each additional unit of the good decreases.
In other words, the first unit of a good will provide the consumer with the most satisfaction, the second unit will provide less satisfaction, and so on. This is because the consumer’s needs for the good are being met more and more as they consume more of it.
Gossen’s second law is a fundamental principle of economics, and it has important implications for consumer behavior. For example, it suggests that consumers will not continue to consume a good indefinitely, even if it is free. This is because the marginal utility of the good will eventually fall to zero, and at that point, the consumer will no longer derive any satisfaction from consuming the good.
Gossen’s second law can also be used to explain why consumers often buy goods in bulk. When consumers buy goods in bulk, they are essentially paying a lower price for each unit of the good. This means that the marginal utility of each unit of the good is higher, and the consumer is more likely to derive satisfaction from consuming the good.
Overall, Gossen’s second law is a powerful tool that can be used to understand consumer behavior. It is a fundamental principle of economics, and it has important implications for how consumers make decisions about what to buy.
A. consumer maximises his total pleasure, when satisfaction gained from marginal units of all commodities is the same. This is not always the case. For example, a consumer may derive more satisfaction from consuming a good that is scarce than from consuming a good that is abundant.
B. consumers gain satisfaction only when $\frac{{{P_x}}}{{{P_y}}} = \frac{{M{U_x}}}{{M{U_y}}}$. This is the law of marginal utility equalization, which is a different law from Gossen’s second law. The law of marginal utility equalization states that consumers will only consume a combination of goods where the marginal utility of each good is equal to the price of the good.
D. All of the above. This is not the case. Only option C is correct.