Which of the following statements is correct?
ECONOMICS
WAEC 2014
Which of the following statements is correct?
- A. As total utility increases, the marginal utility also increases
- B. The marginal utility is a always zero whenever the total utility reaches the maximum
- C. The total utility is at maximum whenever marginal utility is at it's maximum
- D. There is no relationship between total utility and the marginal utility
Correct Answer: B. The marginal utility is a always zero whenever the total utility reaches the maximum
Explanation
Marginal utility is the slope of the total utility curse. At maximum point slope of total utility is equal to zero. Therefore the marginal utility is also zero when total utility reaches its maximum level. Total utility is the sum of utility which consumer gains from consumption of certain goods and services.
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