ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decrease at an increasing rate
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Remain constant
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Increase at an increasing rate
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Increase at a decreasing rate
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Detailed explanation-1: -When marginal utility diminishes but stays positive then total utility increases at a decreasing rate as it is the summation of all marginal utilities.
Detailed explanation-2: -According to the law of diminishing marginal utility, when marginal utility diminishes, total utility increases at a decreasing rate. Marginal utility is the rate of change in total utility, thus, it decides the slope of total utility curve.
Detailed explanation-3: -As more and more units of commodity are consumed marginal utility derived from each successive unit tends to diminish so total utility increases at diminishing rate up.
Detailed explanation-4: -As long as marginal utility is positive, total utility will increase. Once marginal utility is negative, then total utility will decrease. Economists aim to study total utility and marginal utility to understand consumer behavior.
Detailed explanation-5: -So, when the total product is increasing at a decreasing rate, it means that the marginal product of production is positive but is decreasing with the increase in variable input.