Question

Identify which of the following statement is correct and which is incorrect.
A. The marginal utility of a good increase, if the want of the consumer is intensified by consuming a very small quantity of it such as a very little quantity of water given to a very thirsty person.

B. The law of diminishing marginal utility states that as the stock of a commodity decreases with the consumer, its marginal utility to the consumer decreases.

• A. A correct, B correct
• B. A correct, B incorrect
• C. A incorrect, B incorrect
• D. A incorrect, B correct

Answer 1

The correct option is B A correct, B incorrect

A)If the want of the consumer gets intensified or increased by consuming a very small quantity then the marginal utility which will be derived from the another additional unit of that commodity will increase.For example, if a very less amount of water is given to a thirsty person, then the marginal utility will rise by consuming the second glass of water as the his want gets intensified even after consuming the first glass of water.

B)The law of diminishing marginal utility states that as the consumption increases the marginal utility derived from the each successive units tends to decline. The consumer is less willing to sacrifice one good to consume one more additional unit of another good at a higher level of consumption.