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Evaluate the following statement: Rational consumers should stop consuming as soon as diminishing marginal utility kicks...

Evaluate the following statement:

Rational consumers should stop consuming as soon as diminishing marginal utility kicks in.

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Answer #1

This is statement is not correct

Rational consumers are utility maximizing economic agents. Their utility is maximized only when the marginal utility is zero. The region in which the marginal utility is diminishing is also the region in which the total utility is still increasing although at a decreasing rate.

A rational consumers should stop consuming only when the marginal utility turns zero because at this level of consumption the total utility is maximum.

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