Question : Which of the following statement is not true?
Option 1: As long as MU is positive, TU increases
Option 2: TU is zero when MU is zero
Option 3: TU starts decreasing when MU is negative
Option 4: After the point of satiety, MU becomes negative
Correct Answer: After the point of satiety, MU becomes negative
Solution : The correct answer is (d) After the point of satiety, MU becomes negative.
After the point of satiety, which is the point where the consumer reaches maximum satisfaction or utility from consuming a good, the marginal utility (MU) does not become negative. Instead, the marginal utility becomes zero. At the point of satiety, the consumer no longer derives any additional satisfaction from consuming more units of the good, but the marginal utility remains zero.
