Question : Which of the following describes 'point of satiety' best
Option 1: TU starts falling
Option 2: TU reaches at its maximum
Option 3: MU is increasing
Option 4: TU is constant
Correct Answer: TU starts falling
Solution : The correct answer is (a) TU starts falling
The "point of satiety" refers to a situation where the total utility (TU) derived from consuming a good starts falling.
Initially, as the consumer consumes more units of a good, the total utility increases, but at a certain point, the additional units of the good provide less and less utility, eventually leading to a decrease in total utility. This is known as the point of satiety or the point of diminishing returns. At this point, the consumer's satisfaction or utility from consuming additional units of the good decreases.
Related Questions
Trending Articles/News
.jpg)
