The total utility (TU) a consumer gets from successive units of a commodity is shown below.
| Units | 1 | 2 | 3 | 4 | 5 | 6 |
|---|---|---|---|---|---|---|
| TU | 12 | 18 | 22 | 24 | 24 | 22 |
Which of the following statements are correct?
(A) Marginal utility becomes zero at the 4th unit.
(B) The marginal utility of the 3rd unit is 4.
(C) The marginal utility of the 6th unit is –2.
(D) Total utility is the highest at 4 and 5 units.
(E) Up to 4 units, total utility rises at an increasing rate.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B), (C) and (D) only
Marginal utility of a unit = TU with that unit − TU without it. From the table, MU of units 1 to 6 is 12, 6, 4, 2, 0 and −2.
(A) Marginal utility becomes zero at the 4th unit. — Incorrect. MU of the 4th unit is 24 − 22 = 2; MU becomes zero at the 5th unit.
(B) The marginal utility of the 3rd unit is 4. — Correct. 22 − 18 = 4.
(C) The marginal utility of the 6th unit is –2. — Correct. 22 − 24 = −2.
(D) Total utility is the highest at 4 and 5 units. — Correct. TU is 24 at both, its largest value.
(E) Up to 4 units, total utility rises at an increasing rate. — Incorrect. TU rises by 12, 6, 4, 2: it rises at a diminishing rate.
NCERT (2026-27): “Measures of Utility … In general, MUn = TUn – TUn-1, where subscript n refers to the nth unit of the commodity …” “Notice that MU3 is less than MU2. You may also notice that total utility increases but at a diminishing rate: The rate of change in total utility due to change in quantity of commodity consumed is a measure of marginal utility. This marginal utility diminishes with increase in consumption of the commodity from 12 to 6, 6 to 4 and so on. This follows from the law of diminishing marginal utility. … 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.” |