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Question
Higher consumption of a commodity may mean lower and lower marginal utility, but it never implies negative total utility. State True or False.
Higher consumption of a commodity may mean lower and lower marginal utility, but it never implies negative total utility. State True or False.
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Solution
The correct option is A True
Yes. As the consumer increases the consumption, the marginal utility derived from the consumption of a commodity must diminish as more units of that commodity are consumed at a point of time, and even can be negative. But the total utility or total satisfaction derived from that commodity can never be negative. A rational consumer would never buy a commodity, which offers only negative satisfaction.
Yes. As the consumer increases the consumption, the marginal utility derived from the consumption of a commodity must diminish as more units of that commodity are consumed at a point of time, and even can be negative. But the total utility or total satisfaction derived from that commodity can never be negative. A rational consumer would never buy a commodity, which offers only negative satisfaction.
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