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If consuming an additional unit of a good leads to a decrease in total utility, what can be said about its marginal utility?
- a)Marginal utility is zero.
- b)Marginal utility is negative.
- c)Marginal utility is increasing.
- d)Marginal utility is decreasing.
Correct answer is option 'B'. Can you explain this answer?
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If consuming an additional unit of a good leads to a decrease in total...
When consuming an additional unit of a good leads to a decrease in total utility, it implies that the marginal utility of that additional unit is negative. This means that the satisfaction or utility derived from consuming that additional unit is less than the satisfaction from consuming the previous unit.
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If consuming an additional unit of a good leads to a decrease in total...
Explanation:
1. Total Utility and Marginal Utility:
Total utility refers to the total satisfaction or benefit a consumer derives from consuming a certain quantity of a good. Marginal utility, on the other hand, refers to the additional satisfaction gained from consuming one more unit of a good.
2. Relationship between Total Utility and Marginal Utility:
When total utility decreases with the consumption of an additional unit of a good, it indicates that the marginal utility of that unit is negative. This means that the consumer is experiencing diminishing returns or negative satisfaction from consuming more of the good.
3. Diminishing Marginal Utility:
Diminishing marginal utility is a fundamental concept in economics, stating that as a person consumes more of a good, the additional satisfaction or utility gained from each additional unit decreases. Eventually, it may even turn negative, leading to a decrease in total utility.
4. Implications of Negative Marginal Utility:
When marginal utility is negative, it implies that consuming an additional unit of the good leads to a decrease in overall satisfaction. This can influence consumer behavior by reducing the desire to consume more of the good, as it is no longer contributing positively to the total utility.
In conclusion, if consuming an additional unit of a good leads to a decrease in total utility, the marginal utility of that unit is negative. This highlights the concept of diminishing marginal utility and its impact on consumer decision-making.
1. Total Utility and Marginal Utility:
Total utility refers to the total satisfaction or benefit a consumer derives from consuming a certain quantity of a good. Marginal utility, on the other hand, refers to the additional satisfaction gained from consuming one more unit of a good.
2. Relationship between Total Utility and Marginal Utility:
When total utility decreases with the consumption of an additional unit of a good, it indicates that the marginal utility of that unit is negative. This means that the consumer is experiencing diminishing returns or negative satisfaction from consuming more of the good.
3. Diminishing Marginal Utility:
Diminishing marginal utility is a fundamental concept in economics, stating that as a person consumes more of a good, the additional satisfaction or utility gained from each additional unit decreases. Eventually, it may even turn negative, leading to a decrease in total utility.
4. Implications of Negative Marginal Utility:
When marginal utility is negative, it implies that consuming an additional unit of the good leads to a decrease in overall satisfaction. This can influence consumer behavior by reducing the desire to consume more of the good, as it is no longer contributing positively to the total utility.
In conclusion, if consuming an additional unit of a good leads to a decrease in total utility, the marginal utility of that unit is negative. This highlights the concept of diminishing marginal utility and its impact on consumer decision-making.
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If consuming an additional unit of a good leads to a decrease in total utility, what can be said about its marginal utility?a)Marginal utility is zero.b)Marginal utility is negative.c)Marginal utility is increasing.d)Marginal utility is decreasing.Correct answer is option 'B'. Can you explain this answer?
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