What happens to total utility if the marginal utility of a commodity is negative?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → total utility decreases
Marginal utility (MU) is the change in total utility (TU) from one more unit. A negative MU means that unit takes away satisfaction, so TU falls.
For example, the 6th unit has MU = −2, and TU falls from 24 to 22.
NCERT (2026-27): “Measures of Utility … Law of Diminishing Marginal Utility states that marginal utility from consuming each additional unit of a commodity declines as its consumption increases, while keeping consumption of other commodities constant. MU becomes zero at a level when TU remains constant. In the example, TU does not change at 5th unit of consumption and therefore MU5= 0. Thereafter, TU starts falling and MU becomes negative.” |