Multiple choice

Total utility is maximum at a point when marginal utility is

  1. positive

  2. negative

  3. positive but decreasing

  4. zero
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The law of diminishing marginal utility states that as consumption increases, total utility rises at a decreasing rate. When marginal utility reaches zero, total utility is at its maximum point - consuming one more unit would not increase satisfaction. Beyond this point, marginal utility becomes negative and total utility declines.

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