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Question

When marginal utility is zero, the total utility is _______.

A
Minimum
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B
Increasing
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C
Maximum
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D
Decreasing
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Solution

The correct option is C Maximum
Marginal utility is the defined as the change in total utility resulting from one additional unit consumed. For utility to be maximized the marginal product should be 0. As if marginal utility ≥ 0 it is beneficial to increase consumption. If marginal utility ≤ 0 it is beneficial to decrease consumption.


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