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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


Team Careers360 24th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

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.

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