Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Given below are two statements:
Statement 1: When TU is constant is indicates that MU has becomes zero. 
Statement 2: When TU starts falling that means now MU has become positive.
Which statement/s are correct?

Options:

Both the statements are true

Both the statements are false

Statement 1 is true and Statement 2 is false

Statement 2 is true and Statement 1 is false

Correct Answer:

Statement 1 is true and Statement 2 is false

Explanation:

When MU has become zero, it indicates that TU has reached it maximum. Whereas, consumption beyond the saturation point causes TU to fall as MU becomes negative.