Choose the correct statements about utility:
A. As consumption increases marginal utility increases
B. As consumption increases marginal utility decreases.
C. The utility does not differ from person to person
D. Total utility is the sum of marginal utilities
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → B and D only
Utility is the capacity of a good to satisfy a want. Marginal utility is the change in total utility from consuming one more unit.
A. As consumption increases marginal utility increases — Incorrect. Each further unit of a good gives lower marginal utility than the one before it.
B. As consumption increases marginal utility decreases. — Correct. This is the law of diminishing marginal utility.
C. The utility does not differ from person to person — Incorrect. Utility is subjective. Different people can get different levels of utility from the same good.
D. Total utility is the sum of marginal utilities — Correct. Total utility from n units is MU1 + MU2 + ... + MUn, where MU stands for marginal utility.
NCERT (2026-27): “2.1 Utility … Utility is subjective. Different individuals can get different levels of utility from the same commodity.… 2.1.1 Cardinal Utility Analysis … Marginal Utility: Marginal utility (MU) is the change in total utility due to consumption of one additional unit of a commodity.… …Usually, it is seen that the marginal utility diminishes with increase in consumption of the commodity. This happens because having obtained some amount of the commodity, the desire of the consumer to have still more of it becomes weaker.…”
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