Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which of the following are true-
In cardinal approach,
a) When TU is rising at an increasing rate, MU also rises .
b) When TU is rising at decreasing rate, MU falls.
c) MU falls due to Law of Diminishing Marginal Utility.
d) When TU is maximum MU is 0.

Options:

a, b, c and d

a, c and d

b, c and d

a, b and c

Correct Answer:

a, b, c and d

Explanation:

The relationship between TU and MU can be explained as follows: 

  • When MU increases, TU increases at an increasing rate.
  • When MU decreases, TU increases but at a diminishing rate.
  • When MU is zero, TU is at its maximum.
  • When MU is negative, TU starts declining.