Question

Rupert wants to know the about the relationship between total utility and marginal utility. Which of the following could you tell Rupert? A. When his total utility is rising, marginal is declining at a decreasing rate. B. When his total utility is rising, marginal utility is declining C. When his total utility is rising, marginal utility is rising at an increasing rate. D. All of the other answers are incorrect E. When his total utility is rising, marginal utility is rising

Answer 1

The relationship between total utility and marginal utility could be best described by the stating that when his total utility is rising marginal utility is declining. Marginal utility is the addition to total utility. Marginal Utility Declines because of law of diminishing marginal utility according to which as more and more units of a good is consumed the Marginal Utility of Consumption of an additional good diminishes. But even when marginal utility declines and is positive, total utility increases.

So, the relationship between total utility and marginal utility is described by stating that when his total utility is rising, marginal utility is declining.

Hence, Option B is correct.