Question : When marginal utility is negative, total utility is as follows:
Option 1: Starts decreasing
Option 2: Increases at a decreasing rate
Option 3: It is at his maximum point.
Option 4: None of the above
Correct Answer: Starts decreasing
Solution : Total utility decreases when marginal utility is negative because at that point, consuming one more unit of the product has a negative impact on total utility. Marginal utility is the rate of total utility. Hence option a is the correct answer.
Question : According to the principle of diminishing marginal utility, as a consumer consumes more of a good:
Option 1: The total utility derived from the good increases at a decreasing rate.
Option 2: The marginal utility derived from the good increases at a decreasing rate.
Option 3: The total utility derived from the good decreases at a decreasing rate.
Option 4: The marginal utility derived from the good decreases at a decreasing rate.
Question : According to the law of diminishing marginal utility, as a consumer consumes more of a good:
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