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Marginal Utility

When marginal...

Question

When marginal utility (MU) is zero, total utility (TU) diminishes.

A

True

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B

False

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Solution

The correct option is B False
When marginal utility is zero it means the consumer would not be getting any more satisfaction from consuming more of the product. But, this does not mean total utility is zero. Total utility will be at its highest when marginal utility is zero.

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Q. When total utility (TU) increases marginal utility (MU) is negative.

Q. State with reason whether you agree or disagree:

1. There are no real exceptions to the law of Diminishing Marginal Utility.

2. When MU is zero, TU diminishes.

3. Law of Diminishing Marginal utility is important in practice.

Q. Fill in the blanks with appropriate alternatives given in the bracket:

1. _________________ refers to want satisfying power of a commodity. (Usefulness/ Utility/ Satisfaction/ Happieness)

2. Marginal utility diminishes, as consumption of commodity ________. (increases/ decreases/ remains constant/ become zero)

3. _________________ utility is the utility derived from the last unit of the commodity consumed. (Average/ Total/ Marginal/ Zero)

4. When MU is ______________ TU decreases. (positive/ negative/ zero/ high)

Q.
Total utility starts diminishing when marginal utility begins to diminish.

Q. Distinguish between :
Total Utility and Marginal Utility Diminishing Marginal Utility.

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