UPSC Exam > UPSC Questions > Total utility is maximum when?a)Marginal util...
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Total utility is maximum when?
- a)Marginal utility is zero.
- b)Average utility is equal to zero
- c)Average utility is maximum
- d)Marginal utility is maximum
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Total utility is maximum when?a)Marginal utility is zero.b)Average uti...
Explanation:
Total utility refers to the total satisfaction or happiness that a consumer derives from the consumption of a good or service. The law of diminishing marginal utility states that as a consumer consumes more and more units of a good or service, the additional satisfaction derived from each additional unit decreases. Therefore, the total utility increases at a decreasing rate.
When is Total Utility Maximum?
Total utility is maximum when a consumer consumes a certain amount of a good or service where the marginal utility is zero. This is because when the marginal utility of a good or service is zero, the total utility is at its maximum possible level.
Why is Marginal Utility Zero?
Marginal utility is zero when the consumer has consumed the optimal level of a good or service. At this point, the additional satisfaction derived from consuming an additional unit of the good or service is zero. Therefore, the total utility is at its maximum level.
Example:
For example, if a consumer is hungry and eats an apple, the first apple will give the consumer a high level of satisfaction. However, as the consumer continues to eat more apples, the marginal utility of each additional apple will decrease. Eventually, the consumer will reach a point where the marginal utility of the next apple is zero, and the total utility is at its maximum level.
Therefore, the correct answer is option 'A' - Total utility is maximum when the marginal utility is zero.
Total utility refers to the total satisfaction or happiness that a consumer derives from the consumption of a good or service. The law of diminishing marginal utility states that as a consumer consumes more and more units of a good or service, the additional satisfaction derived from each additional unit decreases. Therefore, the total utility increases at a decreasing rate.
When is Total Utility Maximum?
Total utility is maximum when a consumer consumes a certain amount of a good or service where the marginal utility is zero. This is because when the marginal utility of a good or service is zero, the total utility is at its maximum possible level.
Why is Marginal Utility Zero?
Marginal utility is zero when the consumer has consumed the optimal level of a good or service. At this point, the additional satisfaction derived from consuming an additional unit of the good or service is zero. Therefore, the total utility is at its maximum level.
Example:
For example, if a consumer is hungry and eats an apple, the first apple will give the consumer a high level of satisfaction. However, as the consumer continues to eat more apples, the marginal utility of each additional apple will decrease. Eventually, the consumer will reach a point where the marginal utility of the next apple is zero, and the total utility is at its maximum level.
Therefore, the correct answer is option 'A' - Total utility is maximum when the marginal utility is zero.
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Community Answer
Total utility is maximum when?a)Marginal utility is zero.b)Average uti...
Total utility is the sum of all marginal utilities derived from the consumption of each additional unit of a commodity.
When marginal utility is zero, the consumer derives no further utility from consumption and any further consumption will lead to negative marginal utility.
Thus, the total utility is maximum at this point and any further consumption of that commodity will lead to a diminishing total utility
Hence when TU is at a maximum point, then MU will be Zero.
When marginal utility is zero, the consumer derives no further utility from consumption and any further consumption will lead to negative marginal utility.
Thus, the total utility is maximum at this point and any further consumption of that commodity will lead to a diminishing total utility
Hence when TU is at a maximum point, then MU will be Zero.
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Total utility is maximum when?a)Marginal utility is zero.b)Average utility is equal to zeroc)Average utility is maximumd)Marginal utility is maximumCorrect answer is option 'A'. Can you explain this answer?
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