GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer reaches a saturation point for a product when MU is
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Zero
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Positive
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Negative
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None of these
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Explanation:
Detailed explanation-1: -When the total utility curve reaches its maximum, marginal utility is zero. This means the consumer has reached the point of saturation. After the point of saturation, the total utility curve’s slope becomes negative, indicating that marginal utility is negative.
Detailed explanation-2: -When marginal utility (MU) is zero, total utility (TU) diminishes.
Detailed explanation-3: -A consumer maximize his utility or satisfaction when marginal utility is zero. When marginal utility is zero, total utility reach its maximum level. Beyond this point, total utility starts decreasing and marginal utility becomes negative.
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