Assertion :Total utility will be maximum when marginal utility to price of respective products are equal. Reason: Deviation from this situation leads to reduction in maximum utility.
A
Both Assertion and Reason are correct
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B
Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion
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C
Assertion is correct but Reason is incorrect
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D
Both Assertion and Reason are incorrect
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Solution
The correct option is A Both Assertion and Reason are correct
Total utility will increase and reach its maximum point when ,
MU(marginal utility) = P(price of the given product
Beyond this point MU will be less than P
Hence, this situation will reduce the marginal utility derived from the consumption of an additional unit of the product.