Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:
Choose correct statements about utility
  1. As consumption increases marginal utility increases
  2. As consumption increases marginal utility decreases.
  3. The utility does not differ from person to person
  4. Total utility is the sum of marginal utilities
Choose the correct answer from the options given below:
Options:
 A and B only

B and C only

C and A only

B and D only

Correct Answer:

B and D only

Explanation:

Marginal utility refers to the benefit gained from consuming one additional unit of a commodity. According to the law of diminishing marginal utility, when consumption rises, the marginal utility gained from each extra unit decreases, all other things being equal. Also, total utility refers to the sum total of all the marginal utilities derived from a product. As utility is a behavioral concept, it varies from person to person. Psychologically, every consumer has his likes and dislikes and everyone determines his own level of satisfaction.