Question

Which of the following statements is correct?

Multiple Choice

• When marginal utility is zero, an increase in the quantity consumed will make total utility zero.

• When marginal utility is decreasing, an increase in the quantity consumed will decrease total utility.

• When marginal utility is positive, an increase in the quantity consumed will increase total utility

• When marginal utility is positive, an increase in the quantity consumed will decrease total utility

Answer 1

Answer -c) When marginal utility is positive, an increase in the quantity consumed will increase total utility.

Marginal utility is the utility of the additional unit consumed by a consumer. When the consumer consumes additional units of a commodity, the marginal utility decreases. But the total utility increases at a decreasing rate. Total utility is otherwise the summation of marginal utility. Hence, as long as the marginal utility is positive, total utility increases. When the marginal utility becomes zero, the total utility will be at maximum. This point is also called as the saturation point. After saturation point, marginal utility becomes negative, and due to this, total utility decreases.

Answer 2

ANSWER :

Correct answer is :

When marginal utility is positive , an increase in the quantity consumed will increase total utility.

This is so, as marginal utility is utility that an additional quantity of consumption will provide. If it is positive, addition of quantity of consumption will add to the total utility.