Case study: Suppose your father comes back home from work and you offer him a glass of juice. The first glass of juice will give him great satisfaction. The satisfaction from second glass of juice will be relatively less. With further consumption, a stage will come when he would not require any more glass of water. If he is forced to consume even one glass that would lead to disutility.

Which of the following is referred to as "Point of satiety"?

Marginal utility is zero

The correct answer is Option 2: Marginal utility is zero

When MU is zero and TU is maximum, we say that the "Point of satiety" is achieved. Beyond this point the marginal utility becomes negative and total utility starts declining.

Explanation:

• The "Point of satiety" is the point at which the consumer's marginal utility from consuming additional units of a good becomes zero.
• In the case described, after consuming the first glass of juice, your father experiences great satisfaction, indicating high marginal utility.
• As he consumes more glasses of juice, the satisfaction or marginal utility derived from each additional glass decreases, but it remains positive until a certain point.
• At the "Point of satiety," the marginal utility becomes zero, indicating that consuming an additional glass of juice does not increase his overall satisfaction or utility.
• If he is forced to consume even one more glass of juice beyond this point, it would lead to disutility, indicating negative marginal utility.