Practicing Success
Practicing Success
CUET Preparation Today
| What happens to the total utility, when marginal utility starts declining but is still positive? |
TU increases but at a diminishing rate TU decreases at a diminishing rate TU increases at an increasing rate TU decreases but at an increasing rate |
| TU increases but at a diminishing rate |
| When MU is increasing, TU increases at an increasing rate. When MU starts declining but is still positive, TU increases but at a diminishing rate. Then there comes a point where the TU is maximum and MU is zero, this is the point of maximum satisfaction. Consumption beyond this leads to decline in the TU due to the fact that MU is now negative. |
