Asked by Dakota Swader on Jul 05, 2024
Verified
Where total utility is at a maximum,marginal utility is:
A) negative.
B) positive and increasing.
C) zero.
D) positive but decreasing.
Total Utility
Total utility is the total satisfaction or value a consumer derives from consuming a particular quantity of goods or services.
Marginal Utility
The additional satisfaction or utility gained from consuming an additional unit of a good or service.
Maximum
In mathematics or economics, maximum refers to the largest value in a given set or the highest point of a function or dataset.
- Elucidate the connection between marginal utility and overall utility.
- Analyze various cases through the lens of the law of diminishing marginal utility to interpret consumer conduct.
Verified Answer
DK
Dylan KengottJul 09, 2024
Final Answer :
C
Explanation :
Total utility is at a maximum when marginal utility is zero. This means that the last unit of consumption does not add any additional satisfaction to the consumer. If marginal utility was positive, consuming one more unit would increase total utility, and if it was negative, consuming one more unit would actually decrease total utility. Therefore, at the point of maximum total utility, marginal utility must be zero.
Learning Objectives
- Elucidate the connection between marginal utility and overall utility.
- Analyze various cases through the lens of the law of diminishing marginal utility to interpret consumer conduct.