Question

When TU is maximum, then MU is ________.

• A. very low
• B. zero
• C. also maximum
• D. negative

Hint:

Mathematically, MU is the derivative (slope) of the TU curve. When a function reaches its maximum, its slope is zero.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Utility refers to the satisfaction derived from consumption. The relationship between Total Utility (TU) and Marginal Utility (MU) is central to consumer behavior theory.
Step 2: Detailed Explanation:
1. Marginal Utility (MU) is the addition to Total Utility from consuming one more unit.
2. As long as MU is positive, TU continues to rise.
3. When the consumer reaches the point of complete satisfaction (satiety), the next unit adds nothing to total satisfaction. At this point, MU becomes zero.
4. Because no more utility is being added, TU is at its peak (maximum).
5. If consumption continues, MU becomes negative (disutility), causing TU to decline.
Step 3: Final Answer:
At the point of satiety, Total Utility is at its maximum and Marginal Utility is zero.