As total utility is increasing, marginal utility is
As total utility is increasing, marginal utility is
- A) negative and decreasing
- B) positive and increasing
- C) positive and decreasing
- D) zero
Correct Answer: C) positive and decreasing
Explanation
The question is asking about the relationship between total utility and marginal utility. Total utility refers to the total satisfaction or usefulness that a person gets from consuming a certain quantity of a good or service. Marginal utility, on the other hand, refers to the additional satisfaction or usefulness that a person gets from consuming an extra unit of a good or service.
The question is asking, as total utility is increasing, what happens to marginal utility. The options given are negative and decreasing (Option A), positive and increasing (Option B), positive and decreasing (Option C - which is the correct answer) and zero (Option D).
The correct answer is Option C, which means that as total utility increases, marginal utility decreases but remains positive. This is because as a person consumes more of a good or service, the additional satisfaction or usefulness they get from consuming an extra unit decreases. For example, if a person is hungry and eats a slice of pizza, they would feel very satisfied. However, if they eat another slice of pizza, they would still feel satisfied but not as much as they did after the first slice.
It is important to note that marginal utility can eventually become negative if a person consumes too much of a good or service. This is because the additional consumption beyond a certain point can lead to dissatisfaction or even harm.
To summarize, as total utility increases, marginal utility decreases but remains positive. This is because the additional satisfaction or usefulness that a person gets from consuming an extra unit of a good or service decreases.